Blmotallisnn. 


I    ANDREW  JACKSON  UTLEY. 


: 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/bimetallismOOutlerich 


BIMDT/\l>L,ISM 


BY. 


i^y^ 


A^  j'  UTbBY 


Author  of  ^^ Free  Coinage ^^^  '^ Financial  Catechism/' 
^*Cau8e  of  Hard  TimeSy''  etc.,  etc. 


LOS  ANGELES 

FISK  &  HORNBECK 

PRINTERS 

1899 


COPYRIGHT 
1699 

Iy  a.  J.  UTLEY 


BittciohLibnay 


TABbB  OP  GONTBINTS 


Reference  is  to  Sections. 

I.  History  of  the  precious  Metals 1-  is 

II.  Cost  of  the  precious  metals 16-  26 

III.  RATIO  BETWEEN  THE  METALS 27-  44 

IV.  EXPORTATION  OF  THE  PRECIOUS  METALS 45-  50 

V.  Over-Valuation  in  the  united  states 5i-  57 

VL  Consumption  in  the  arts 58-  74 

VII.  VALUE 75-  86 

VIII.  VALUE  OF  THE  PRECIOUS  METALS 87-  94 

IX.  INFLUENCE  OF  LAW  ON  VALUE 95-103 

X.  BIMETALLISM 104-143 

XI.  ADVANTAGES  OF  BIMETALLISM 144-163 

XII.  BIMETALLISM  IN  FRANCE 164-178 

XIII.  GOLD  STANDARD  IN  ENGLAND 179-184 

XIV.  DEPRECIATION  OF  SILVER 185-200 

XV.  INFLATION  OF  PRICES  FROM  BIMETALLISM 201-229 

XVI.  PARITY  OF  EXCHANGE 230-232 

XVII.  DEMONETIZATION 233-260 

XVIII.  BIMETALLISM  IN  THE  UNITED  STATES ...261-304 

XIX.  The  United  States  on  a  Silver  Basis 305-318 

XX.  MEXICO  AND  Silver  money 319-365 

XXI.  APPENDIX 366-416 


PRBFAGB 

A  discussion  of  the  question  of  Bimetallism 
necessarily  embraces,  to  some  extent  at  least, 
the  larger  question  of  money.  The  money 
question  is  of  almost  infinite  importance,  and 
there  is  great  diversity  of  opinion  as  to  the 
essential  elements  of  money.  Alexander  Del 
Mar,  in  the  closing  paragraph  of  his  History 
of  Money  in  Ancient  Countries  says:  **That 
which  has  engaged  the  attention  without 
harmonizing  the  convictions  of  such  master 
minds  as  Aristotle,  Plato,  Tycho  Brahe, 
Copernicus,  Locke,  Newton,  Smith,  Mill  and 
Spencer  is  surely  a  study  which  no  man  can 
afford  to  approach  with  rashness,  nor  leave 
with  complacency.  When  the  principles  which 
underlie  it  are  thoroughly  understood,  money 
is  perhaps  the  mightiest  engine  to  which  man 
can  lend  his  guidance;  unheard,  unfelt,  almost 
unseen,  it  has  the  power  to  so  distribute  the 
burdens,  gratifications  and  opportunities  of 
life  that  each  individual  shall  enjoy  that  share 
of  them  to  which  his  merit  entitles  him,  or  to 
dispense  them  with  so  partial  a  hand  as  to 
violate  every  principle  of  justice  and  perpetu- 


PREFACE 

ate  a  succession  of  social  slaveries  to  the  end 
of  time." 

I  do  not  expect  that  all  who  read  the  follow- 
ing pages  will  agree  with  me  in  my  con- 
clusions, but  I  think  all  will  admit  that  the 
money  question  is  "A  study  which  no  man 
can  afford  to  approach  with  rashness,  nor 
leave  with  complacency. ' ' 

All  I  ask  is  that  he  examine  the  authorities 
cited  and  the  reasons  adduced  in  support  of 
the  conclusions  reached.  If  the  authorities  do 
not  justify  the  premises,  if  the  reasoning  is 
falacious,  if  the  conclusions  are  not  warranted 
by  the  evidence,  of  course  they  should  be 
rejected.  But,  if  the  premises  are  reasonable, 
are  sustained  by  authority,  the  reasoning 
logical  and  the  conclusions  warranted,  and  if 
the  reader  has  previously  entertained  opinions 
at  variance  with  such  conclusions,  I  think  I 
have  the  right  to  expect  that  he  will  make 
further  investigations,  and  that  he  will  not 
accept  the  party  platform  of  any  political 
party  as  infallible.  And  if,  on  further 
investigation,  he  shall  discover  the  truth,  I 
think  I  have  a  right  to  expect  that  he  will 
fearlessly  proclaim  it  and  follow  wherever  it 
may  lead.  A.  J.  UTLEY. 

Los  Angeles,  Cal.,  December,  1899. 


CHAPTER  I. 


HISTORY  OF  THE  PRECIOUS  METALS. 

Sec.  1.  A  careful  study  of  the  history  of  the  precious 
metals  will  conclusively  show  the  effects  of  a  plentiful  as 
contrasted  with  a  limited  supply  of  money,  and  the 
consequences  resulting  from  expanding  or  contracting  the 
volume  of  money.  It  will  establish  beyond  controversy 
the  fact  that  money  is  quantitative,  that  its  value,  as 
measured  by  commodities,  (and  money  has  no  other  value) 
other  things  remaining  the  same,  will  fall,  as  its  quantity 
is  increased,  and  will  rise  as  its  quantity  is  diminished, 
and  also  the  further  fact  that  with  an  increasing  volume 
of  money  times  will  be  good,  business  prosperous,  and  the 
people  contented  and  happy;  while  on  the  other  hand 
with  a  contracting  volume  of  money  industry  will  languish, 
willing  workers  will  be  relegated  to  idleness,  tramps  will 
be  multiplied,  poverty  and  misery,  crime,  suicide,  and 
insanity  will  be  largely  increased,  and  money  will  retire 
from  circulation,  or  will  be  hoarded,  or  collected  in  the 
great  money  centers. 

Sec.  2.  The  above  facts  are  very  cleary  and  forcibly 
illustrated  by  that  distinguished  economist  and  historian, 
Alexander  Del  Mar,  in  his  *'  History  of  the  Precious 
Metals,"  published  by  George  Bell  &  Sons,  in  London, 
in  1880.     I  quote  from  this  publication  a  Table  showing 


8  BIMETALLISM 

population,  and  the  per  capita  circulation  of  money  in  the 
Western  World  for  the  several  periods  intervening 
between  1493  and  1879,  compiled  from  estimates  made 
by  trustworthy  statisticians.  In  connection  with  this 
table,  I  also  quote  from  Del  Mar's  comments  on  the  facts 
shown  by  the  table  a  brief  resume  of  the  effects,  morally, 
socially,  and  politically,  claimed  by  Del  Mar  to  have  been 
produced  by  the  contractions  and  expansions  of  the  volume 
of  money  that  had  taken  place.  Without  doubt,  Del 
Mar's  conclusions  are  correct.  There  certainly  can  be 
no  doubt  of  the  fact  that  the  periods  of  progress  and 
development  were  coincident  with  an  increasing  (per 
capita)  volume  of  money,  while  on  the  contrary,  periods 
of  arrested  development,  depression  in  business;  when 
civilization  stood  still  or  went  backwards,  were  coincident 
with  a  contracting  volume  of  money.  (See  "  History  of 
Precious  Metals,"  pp.  203-205). 

Sec.  3.  *  *  Table  showing  the  estimated  stock  of  Gold  and 
Silver  Coins  and  the  Population  of  the  European  World 
from  time  to  time  since  the  Discovery  of  America.'^ 


Period 

Authority  for 

Population 

Authority  for 

stock  of 

Stock  per 

A.   D. 

Population 

Stock  of  Coin 

Coin 

Capita 

1492 

Estimate 

4o,ooo,ocx) 

Jacob 

£34,000,000 

7 

0 

s      d 
16    0 

1636 

Estimate 

80,000,000 

Estimate 

240,000,000 

3 

0    0 

1690 

Petty-Jacob 

85,000,000 

Jacob 

250,000,000 

3 

0    0 

I7CX) 

Voltaire 

90,000,000 

Jacob 

297,000,000 

3 

6  0 

1776 

Voltaire 

110,000,000 

Jacob 

275,000,000 

2 

8  0 

1808 

Humboldt 

200,000,000 

Jacob 

380,000,000 

I 

18  0 

1828 

Balbi 

240,000,000 

Jacob 

^13,000,000 

I 

6  0 

1838 

Humboldt 

260,000,000 

Estimate  '  270,000,000 

I 

0  0 

1839 

MacCuUoch 

265,000,000 

Storch      284,000,000 

I 

0  0 

1850 

Putnam 

300,000,000 

MacCul'ch!  400,000,000 

I 

7  0 

i860 

Sta.   Journal 

330,000,000 

Estimate     560,000,000 

I 

14  0 

1870 

Behm&Wag 

370,000,000 

Seyd 

720,000,000 

I 

18  0 

1877 

Behm&Wag 

400,000,090 

Estimate 

700,000,000 

I 

15   0 

1879 

Estimate 

410,000,000 

Estimate 

650,000,000 

I 

12  0 

HISTORY  OF  THE  PRECIOUS  METALS  9 

Sec.  4.  Del  Mar  commenting  on  the  facts  shown  by 
the  tables  says: 

"  The  fact  that  the  stock  of  coin  in  1776  is  put  at  less  than  that 
in  1700  may  lead  to  doubt  of  its  correctness;  but  it  seems  to  be  well 
authenticated  that  until  the  development  of  the  great  silver  lodes  of 
Biscaina,  Sombrerete,  and  Valenciana,  in  Mexico,  towards  the  end 
of  the  last  century,  the  supplies  of  the  precious  metals  were  not 
only  inadequate  to  the  demands  of  commerce,  but  that  the  stock  of 
coin  in  Europe  and  America  absolutely  declined.  The  falling-off  of 
the  stock  from  1808  to  1839  has  been  admitted  by  Humboldt,  Jacob, 
MacCulIoch,  Tooke,  and  other  writers  on  the  subject. 

"  Referring  now  to  the  general  and  comparative  aspects  of  the 
foregoing  table,  it  will  be  observed  that  at  the  period  of  the 
discovery  of  America  the  Western  World  started  with  a  stock  of 
coin  amounting  to  about  16s.  per  head  of  population,  and  that  this 
proportion  continued  to  increase  until  the  opening  of  the  eighteenth 
century,  when  it  amounted  to  £2,  6s.  per  capita. 

"  During  this  period,  discovery  and  commercial  adventure  were 
stimulated  to  the  extremest  limits.  The  seas  and  bays  of  the 
entire  world  were  explored,  commerce  was  extended  into  the 
Americas,  Africa,  India,  China,  Japan,  and  the  islands  of  the  South 
Sea,  and  colonies  were  founded  all  over  the  world. 

"  The  social  organism  was  stimulated  into  the  greatest  activity. 
This  was  the  period  of  the  Revolution,  Habeas  Corpus  Act,  and 
Bill  of  Rights,  in  England;  of  the  numerous  risings  of  the  peasantry, 
the  Edict  of  Nantes  and  the  Fronde  in  France;  of  the  Republic  in 
the  Netherland;  of  the  Protest  and  Thirty  Years'  War  in  Germany; 
and  of  the  Reformation  throughout  Western  Europe  generally. 
-  "  After  this  period  the  stock  of  coin  diminished  from  £3  6s.  per 
capita  in  1700  to  £2  8s.  per  capita  in  1779,  £1  18s.  per  capita  in  1808, 
£1  6s.  per  capita  in  1828,  and  £1  per  capita  in  1838.  It  is  noticeable 
that  coincidently  with  the  fall  of  the  stock  of  coins  the  Western 
World  exhibited  all  the  marks  of  arrested  development  and  social 
perturbation. 

"  This  was  the  period  during  which  all  the  great  national  debts 

arose;  when  France,  England,  Russia,  Germany,  the  Papal  States, 

the  American  Colonies,  the  United  States,  Brazil,  and  many  other 

countries,    suspended    specie    payments,  and    when    Europe    and 

America  were  almost  constantly  shaken  with  insurrections  and 
wars.  *  *  -X-'*  *  *  *  * 


10 


BIMETALLISM 


"  Before  the  eighteenth  century  the  stock  of  coin  and  of  money 
was  the  same,  for  there  was  little  circulatirig  paper  in  Europe 
beyond  the  confines  of  the  Italian  republics.  After  the  beginning  of 
the  eighteenth  century  the  stock  of  coin  was  not  the  same  as  the 
stock  of  money,  but  only  the  basis  of  it.  At  that  time  the  Bank  of 
England  began  to  issue  circulating  notes,  and  this  example  was 
soon  followed  by  other  institutions.    *  *  *  '^  * 

"  Of  the  stock  of  coin  estimated  to  have  been  in  existence  in  1870 
about  one-third  consisted  of  silver.  The  demonetizations  of  this 
metal  which  since  that  date  have  been  effected  in  several  of  the 
leading  countries  of  the  world,  have  resulted  in  reducing  the  general 
stock  of  coin,  which,  at  the  present  time  [1880],  is  something  below 
the  amount  in  1877.  The  progress  of  the  demonetization  of  silver 
threatens  to  reduce  this  stock  still  further,  and  the  present  tendency 
is  therefore  toward  a  smaller  stock  of  specie  in  the  European  World." 

The  comparative  yield  of  the  great  gold  fields  of  the 
modern  world  are  estimated  by  our  best  statisticians  as 
follows: 


COUNTRY 

Period  during  which  the  product 

was  not  generally  less  than 

;£i,cx)o,ooo  a  year. 

Total  product  of 
Gold  from  be- 
ginning to  end 

Same  in  Dollars 

Japan 

1580  to  1639—60  years 
17 10  to  1789 — 80  years 
1840  to  1878 — 39  years 
1848  to  1878—31  years 
185 1  to  1878— 28  years 

£  40,000,000 
180,000,000 
160,000,000 
220,000,000 
240,000,000 

$  200,000,000 

900,000,000 

800,000,000 

I  100,000,000 

I  200,000,000 

Brazil 

Russia 

California 

Australia 

Total 

840,000,000 

4  200,000,000 

(See  Del  Mar's  History  of  Precious  Metals  p.  172). 

Sec.  6.  The  coinage  value  of  the  world's  production 
of  the  precious  metals  since  the  discovery  of  America  has 
been  carefully  estimated  by  many  very  eminent  statisti- 
cians, a  few  of  the  most  illustrious  of  whom  I  will  quote: 

Sec.  7.  Baron  Von  Humboldt  estimates  the  gold  and 
silver  produced  in  America  from  1492  to  1800.  as  follows: 

Gold :£393,120,000 

Silver 745,260,000 

Total :£1, 138,380,000 


HISTORY  OF  THE  PRECIOUS  METALS  11 

Sec.  8.  Jacobs,  in  his  "  History  of  the  Precious  Met- 
als," estimates  the  world's  production  from  1492  to  1809 
at  ;^1, 360,000, 000;  amount  produced  outside  of  America 
at  ^137,000,000;  American  production  ^1,223,600,000. 

Sec.  9.     Jacob  estimates  consumption  as  follows: 

Exported  to  Asia ^£399,000,000 

Consumed  in  Arts  and  Manufactures 440,000,000 

Loss  by  abrasion  and  Casualty '. 175,000,000 

Coinage  for  Europe  and  America 346,600,000 

To  which  add  :£33,400,000  stock  on  hand  in  1492 33,400,000 

Gives  a  total  money  volume  for  1808  of  :£380,000,000 

Equals  $1,900,000,000  as  the  Western  World's  stock  of  coins  in  1809. 

Sec.  10.  Mr.  Danson  in  an  article  published  in  the 
London  Statistical  Journal,  estimates  the  production  for 
America  from  1492  to  1803  at  ^1,122,000,000.  Deduct- 
ing from  this  ;^25,600,000  for  the  production  for  1801  to 
1803,  and  we  have  as  the  production  prior  to  1801, 
^1,096,400,000. 

Sec.  11.  These  several  estimates  made  by  eminent 
statisticians  are  very  close  together  and  unquestionably 
approximate  very  nearly  the  actual  production  of  the 
precious  metals  in  America  prior  to  1801. 

Sec.  12.  Estimates  have  been  made  of  the  production 
of  gold  and  silver  in  America,  Europe,  Africa  and  Aus- 
tralia since  the  commencement  of  the  present  century,  up 
to  and  including  1877,  by  Humboldt,  Raynal,  Duport, 
Brogniart,  Ward,  Jacob,  Danson,  Tooke,  Birkmyre,  Mac- 
Culloch,  Sir  Hector  Hay,  Blake,  Del  Mar,  Soetbeer, 
Sauerbeck,  and  in  various  official  reports  and  statistical 
journals;  some  of  the  estimates,  however,  only  cover  a 
part  of  the  time,  but  they  substantially  agree  that  the 
production  of  silver  within  that  time  amounted  to  about 
;£548,000,000  (;^2,740,000,000)  and  that  of  gold  to 
about  ;£796,000,000  (^3,980,000,000). 


12  BIMETALLISM 

Sec.  13.  Prior  to  the  middle  of  the  present  century 
the  gold  and  silver  mines  of  the  world  were  worked 
almost  exclusively  by  slave  labor.  The  kings  of  Egypt 
not  only  condemned  criminals  and  those  accused  of  crime 
to  perpetual  slavery  in  the  mines,  but  also  their  relatives 
and  personal  friends.  The  Romans  for  a  long  time  worked 
the  silver  mines  of  Spain  with  slaves  and  the  average 
daily  production  was  only  about  5^d.  per  man,  which 
could  not  much  more  than  have  covered  incidental 
expenses.  The  wars  between  Carthage  and  Rome  were 
mainly  for  the  possession  of  the  silver  mines  of  Spain. 
The  expeditions  of  Hannibal  and  Hamilcar  in  Spain,  of 
Caesar  in  Gaul,  of  Cortez  in  Mexico,  of  Pizarro  in  Peru, 
were  all  undertaken  with  the  object  of  acquiring  the 
precious  metals.  (See  Del  Mar's  *' History  of  the  Pre- 
cious Metals,"  pp.  14  to  27). 

Sec.  14.  During  the  reign  of  Philip  IV.,  1621-55, 
while  there  was  a  large  amount  of  silver  bullion  in  Spain, 
there  was  but  very  little  silver  money.  At  that  time 
Spain  levied  a  tax  of  20  per  cent,  on  the  production  of 
silver,  5  per  cent,  convoy  duty  and  5  per  cent,  seignorage 
on  coining.  There  were  many  other  onerous  charges. 
Many  of  the  wealthy  Spaniards  .on  receiving  remittances 
of  silver  bullion  from  America,  instead  of  having  it  coined 
into  money  had  it  converted  into  plate  and  stored  it  in 
vaults  or  other  safe  places  for  future  use. 

Sec.  15.  Madam  d'  Aunoy,  who  wrote  in  the  reign  of 
Philip  IV.,  states  that  the  Duke  of  Albuquerque  possessed 
1,400  dozen  dinner  plates,  fifty  great  salvers  and  700 
dishes  of  exceedingly  massive  silver;  while  the  Duke  of 
Alva,  who  was  rather  poorly  supplied,  as  things  then 
stood,  had  600  dozen  plates  and  800  dishes. 

The  Due  de  Saint  Simon  (who  wrote  during  the  early 
part  of  the  eighteenth  century)  mentions  that  the  palace 


HISTORY  OF  THE  PRECIOUS  METALS  13 

of  the  Duke  of  Albuquerque  was  furnished  with  suites  of 
splendid  furniture  of  which  the  frame  work,  instead  jii 
being  of  wood,  was  of  massive  silver.  Del  Mar,  in  com- 
menting on  the  above  facts  in  his  ''  Money  and  Civiliza- 
tion" (page  99),  and  on  the  disappointment  of  Philip  at 
the  failure  of  the  wealthy  Spanish  nobility  to  bring  their 
silver  bullion  to  the  mint,  says: 

"  He  forgot  that  it  was  not  the  interest  of  the  wealthy  classes  to 
promote  a  rise  of  prices.  They  had  seen  enough  of  that  in  England, 
where  the  consequences  had  been  a  renunciation  of  the  Catholic 
faith,  the  execution  of  the  king,  and  the  establishment  of  a  Puritan 
commonwealth.  What  the  Spanish  grandees  wanted  was  not  rising 
prices,  but  falling  ones,  and  so,  instead  of  sending  their  bullion  to 
the  mint,  they  continued  to  pile  it  up  in  their  vaults,  awaiting  the 
inevitable  hour  when,  from  increasing  scarcity,  each  ounce  of  it, 
when  coined  into  money  would  purchase  twice  as  much  of  commod- 
ities as  before." 


CHAPTER 


COST  OF  THE  PRECIOUS  METALS. 

Sec.  16.  Jacob,  in  his  **  History  of  the  Precious 
Metals,"  says  that  from  the  dissolution  of  the  Western 
Empire  until  the  discovery  of  America  the  precious  metals 
were  sought  not  by  exploring  the  bowels  of  the  earth  but 
by  the  more  summary  process  of  conquest,  tribute  and 
plunder.  Del  Mar  thinks  that  the  same  principles 
obtained  until  the  discovery  of  the  mines  of  California 
and  Australia,  and  that  practically  there  was  no  free 
mining  of  the  precious  metals  prior  to  that  time,  and  that 
economic  maxims  based  on  the  production  of  the  precious 
metals  prior  to  1848  are  of  but  very  little  value. 

Sec.  17.  Some  economists  have  contended  that  the 
value  of  the  precious  metals  was  determined  by  the  cost 
of  their  production.  Adam  Smith,  in  the  **  Wealth  of 
Nations,"  (page  138)  contends  that  the  price  of  the 
precious  metals  all  over  the  world  is  determined  by  their 
price  at  the  most  fertile  mines.  John  Stuart  Mill  follows 
Adam  Smith,  but  says  that  the  production  to  have  that 
effect  must  be  in  a  state  of  freedom.  Mill,  however,  in 
other  parts  of  his  **  Principles  of  Political  Economy," 
repeatedly  says  that  the  value  of  money  is  determined 
by  its  quantity,  and  that  as  the  quantity  is  increased, 
other  things  remaining  the  same,  its  value  will  diminish 
and  as  its  volume  is  diminished  its  value  will  increase, 
and  as  this  proposition  is  directly  at  variance  with  the 


COST  OF  THE  PRECIOUS  METALS  15 

Other,  and  as  the  last  proposition  is  sustained  both  by 
history  and  well  recognized  economic  principles,  and  the 
former  proposition  is  contradicted  by  facts  as  well  as 
reason,  we  must  accept  the  second  proposition  as  being 
true  and  reject  the  former. 

Sec.  18.  While  it  is  true  of  commodities  (such  for 
example  as  manufactured  articles,  which  may  be  produced 
in  unlimited  quantity),  that  their  value  depends  largely 
on  the  cost  of  their  production;  and  while  to  a  less  extent 
it  is  also  true  of  agricultural  products,  it  is  not  true  of  the 
precious  metals.  Commodities,  the  value  of  which  is 
largely  controlled  by  the  cost  of  production,  are  almost 
immediately  consumed  or  wasted  and  when  wanted  again 
must  be  reproduced.  This  is  not  true  of  the  precious 
metals;  they  survive  the  date  of  their  acquisition.  Much 
of  the  stock  now  on  hand  we  have  acquired  by  inheritance 
from  ages  long  past.  They  were  produced  by  slave  labor 
or  acquired  by  conquest  or  plunder.  The  cost  of  their 
production  was  not  controlled  by  any  economical  principle, 
and  the  gold  and  silver  now  produced  under  free  labor 
enter  into  and  become  a  part  of  the  general  stock  and 
their  value  is  modified  by  the  value  of  that  produced  in 
ages  long  since  past,  as  the  value  of  that  so  produced  is 
modified  by  the  present  production. 

Sec.  19.  Under  circumstances  of  entire  freedom  in 
the  laws  concerning  the  production  and  coinage  of  the 
precious  metals,  and  supposing,  like  manufactured  com- 
modities, they  could  always  be  obtained  by  labor  devoted 
to  mining,  and  supposing,  also,  that  there  was  no 
accumulated  stock  to  influence  the  question,  and  no  law 
creating  artificial  demands  for  these  metals,  or  for  either 
of  them,  the  cost  of  production  would  undoubtedly  have 
an  important  bearing  upon  their  value;  as  the  case 
stands,  however,  the  cost  of  production  has  so  little  to  do 


16 


BIMETALLISM 


with  the  matter  that  for  all  practical  purposes  it  need  not 
be  considered  at  all. 

Sec.  20.  Mr.  Lewis  Garnett,  formerly  manager  of 
the  San  Francisoco  Refining  Works,  in  a  pamphlet 
published  in  1869,  says  that  the  labor  alone  employed  in 
the  production  of  gold  in  California  at  that  time  [1869] 
cost  more  than  two  dollars  for  every  dollar's  worth  of  gold 
produced,  to  say  nothing  about  the  expensive  machinery 
used,  salaries  of  officers,  etc. 

Sec.  21.  Del  Mar,  from  estimates  carefully  made  from 
facts  obtained  from  personal  inspection  of  all  the  mines  of 
importance  in  California,  estimates  the  expense  of  the 
gold  production  from  1848  to  1856,  both  inclusive,  as 
follows:  (See  "  History  of  the  Precious  Metals/' 
page  262). 


Local  price  of 

Value  of  their  combined 

Product  of  gold, 
mint  value 

Year 

Workers 

each  man's  labor 
per  day 

labor  for  the  year 
of  300  days 

1848 

5,000 

£3,    Os. 

Od. 

£  4,500,000 

£  2,000,000 

1849 

22,500 

3     0 

0 

20,250,000 

8,000,000 

1850 

115,000 

2     8 

0 

82,800,000 

10,000.000 

1851 

120,000 

2    0 

0 

72,000,000 

11,000,000 

1852 

130,000 

1  12 

0 

62,400,000 

12,000,000 

1853 

140,000 

1     8 

0 

67,200,000 

13,000,000 

-    1854 

150,000 

1     4 

0 

54,000,000 

12,000,000 

1855 

160,000 

1     0 

0 

48,000,000 

11,000,000 

1856 

150,000 

16 

0 

36,000,000 

11,000,000 

447,150,000 

90,000,000 

Sec.  22.  From  the  above  table  it  will  be  seen  that 
even  in  the  flush  times  of  California  mining,  gold  was 
produced  on  the  average  at  a  loss,  saying  nothing  about 
the  great  destruction  of  the  forests  and  injury  done  to 
the  land. 

A  carefully  prepared  estimate  of  the  cost  of  the  produc- 
tion of  gold  in  Australia  makes  about  the  same  showing. 

Sec.  23.  That  certain  adventures  afford  enormous 
profits  there  is  no  doubt,  but  many  more  are  operated  at 


COST  OF  THE  PRECIOUS  METALS  17 

a  loss.  Del  Mar's  "History  of  the  Precious  Metals," 
page  290,  refers  to  two  hydraulic  companies,  one  of 
which,  employing  ten  men  at  16  shillings  per  day  each, 
and  200  inches  or  4,000  gallons  of  water,  washed  down 
224,000  cubic  feet  of  earth  in  six  days,  and  though  there 
was  obtained  from  it  only  ;£600  in  gold  (about  five- 
eighths  of  a  penny  to  the  cubic  foot,)  ;£470  of  it  was 
profit.  The  other  company  referred  to  used  '*  2,000 
inches  or  40,000  gallons  of  water  for  100  days,  and 
washed  down  1,000,000  cubic  yards  of  gravel  (containing 
less  than  a  quarter  of  a  penny  to  the  cubic  foot),  and 
obtained  ;^6,400,  of  which  ^2,400  was  profit.  The  cube 
of  earth  washed  down  was  1,100  feet  long,  300  feet  wide, 
and  80  feet  deep." 

Sec.  24.  Mr.  Burchard  (formerly  Director  of  the  Mint), 
in  his  essay  on  the  cost  of  the  production  of  gold  and 
silver,  takes  certain  selected  mines  and  estimates  the 
cost  of  production  for  a  single  year  and  assumes  this  to 
be  the  average  cost  of  production.  Mr.  Burchard  knew 
better.  His  conclusions  are  misleading  and  untrue. 
The  cost  of  producing  gold  or  silver  cannot  be  determined 
from  one  year's  experience  of  certain  selected  mines; 
but  only  "  From  the  average  cost  of  the  total  production 
from  all  of  the  mines  during  a  reasonably  long  period  of 
time;"  and  to  this  should  be  added  the  cost  of  prospecting, 
sinking  useless  and  abandoned  shafts,  and  various  other 
incidental  expenses  incurred  in  locating  mines  whether 
productive  or  otherwise.  Neither  is  it  true  as  contended 
by  certain  pseudo  economists  that  as  the  value  of  the 
precious  metals  fell  it  would  result  in  closing  all  but  the 
richest  mines.  Mines  are  not  abandoned  or  closed  when 
they  cease  to  be  profitable.  If  abandoned  by  one  set  of 
operators  they  are  seized  upon  and  operated  by  other 
men  in  the  hope  that  they  may  be  more  successful  than 


18  BIMETALLISM 

the  former  proprietors,  and  that  they  will  reach  the  great 
bonanza  which  they  are  confident  lies  hidden  in  the  rocks 
almost  within  reach.  It  is  the  gambling  instinct  of  man 
that  provokes  the  hazard. 

Sec.  25.  Mr.  Garnett  in  the  essay  hereinbefore  quoted 
from  is  unquestionably  correct  when  he  says: 

"  The  fact  is,  that  the  production  of  the  precious  metals  has 
always  been  one  of  those  fascinating  pursuits  which  the  love  of 
venture  as  well  as  adventure  inherent  in  man,  seems  to  create,  and 
which  the  romantic  and  exciting  vicissitudes  in  individual  fortunes, 
to  which  it  not  infrequently  gives  rise,  continues  to  excite  and 
sustain;  and  such  seems  to  have  been  pretty  much  the  case  at  all 
times  and  in  all  countries." 

Sec.  26.  That  the  additions  to  the  present  stock  of  the 
precious  metals  produced  today  under  free  labor  must  go 
into  the  common  mass,  and  that  its  value  is  necessarily 
influenced  by  the  precious  metals  obtained  by  the  ravages 
of  Causer  in  Gaul,  of  Scipio  in  Spain,  of  Alexander,  of 
Darius,  and  by  the  plunders  and  robberies  of  Cortez 
and  Pizarro  in  Mexico  and  South  America,  there  can  be 
no  doubt;  and  that  it  is  the  quantity  of  the  precious 
metals,  no  matter  how  or  at  what  cost  acquired,  now  in 
use  as  money,  modified  by  the  paper,  token  and  other 
fiduciary  money,  that  determines  the  value  or  purchasing 
power  of  money,  is  a  fact  universally  admitted  by  all 
well  informed  men.  A  nugget  of  gold  picked  up  by  a 
hunter  in  the  woods  that  cost  no  labor,  has  precisely  the 
same  value  as  an  equal  amount  of  gold  obtained  by  the 
miner  from  the  bowels  of  the  earth  at  immense  cost  and 
labor.  The  cost  of  the  production  of  the  precious  metals 
has  absolutely  no  influence  upon  their  value  only  as  it 
may  tend  to  increase  or  diminish  the  supply.  As  the 
supply,  in  proportion  to  the  demand,  increases,  the  value 
falls,  and  as  the  supply  in  proportion  to  the  demand 
diminishes,  the  value  rises. 


CHAPTER  111. 


RATIO  BETWEEN  THE  METALS. 

Sec.  27.  That  the  ratio  between  the  relative  values  of 
the  precious  metals  in  their  use  as  money  is  purely  an 
arbitrary  one  established  and  maintained  by  law;  that  the 
ratio  between  them  has  been  repeatedly  changed  by  low- 
ering or  raising  the  relative  value  of  first  one  and  then  the 
other  by  legal  enactment  or  arbitrary  decree;  and  that 
the  annual  production  of  either  of  the  metals,  nor  the 
accumulated  stock  of  either,  as  money,  or  as  bullion,  or 
in  hoards,  or  as  all  combined;  nor  the  past,  present,  or 
prospective  cost  of  either  of  them,  exerts  no,  influence 
whatever  over  their  relative  value  is  a  fact  well  authen- 
ticated by  history. 

Sec.  28.  Alexander  Del  Mar,  in  his  ''  History  of  the 
Precious  Metals,"  page  230,  says: 

"  Supposing  that  the  combined  nations  of  Europe  and  America 
decreed  and  remained  steadfast  to  the  decree  that  the  ratio  of  gold 
and  silver  should  thenceforth  be  as  1  to  1,  it  is  difficult  to  conceive 
how  this  ratio  could  ever  be  changed,  either  by  the  operation  of 
quantity,  mint  charges,  or  any  other  influence.  Relative  demand  of 
the  precious  metals  for  arts  could  not  change  it,  for  even  supposing 
that  everybody  preferred  gold  plate  to  silver— a  preference  which 
under  such  circumstances  cannot  be  admitted— this  would  not 
change  the  ratio.  As  no  atom  of  gold  could  become  money  again, 
except  at  a  par  with  silver,  it  is  impossible  to  imagine  that  any 
scarcity  of  the  one  metal,  or  plentifulness  of  the  other,  could  impair 
their  equal  value.    It  would  not  matter,  if,  other  things  aside,  gold 


20  BIMETALLISM 

were  preferable  to  silver  for  use  in  the  arts  or  not.  The  law  of 
nations,  making  them,  when  coined,  equal  as  money,  and  all  con- 
tracts dischargeable,  all  debts  payable  in  the  same  weight  of  one  as 
the  other;  and  a  conversion  of  both,  from  coin  to  bullion,  and  from 
bullion  to  coin,  being  unlimited,  and  subject  to  the  same  terms  of 
seigniorage,  it  necessarily  follows  that  their  value  would  be  the  same. 
Nor  could  the  vicissitudes  of  production  effect  a  change  in  the  ratio. 
Though  but  a  pound  of  gold  a  year  were  produced  against  millions 
of  pounds  of  silver,  still  would  the  ratio  remain  unchanged.  Nobody 
would  pay  more  than  a  pound  of  silver  for  a  pound  of  gold,  when 
the  former  could  discharge  the  same  amount  of  indebtedness,  past, 
present  and  future.  Nor  would  the  demands  of  commerce  change 
it.  If  debts  were  due  from  one  country  to  another,  the  shipment  of 
one  metal  would  answer  all  the  purposes  which  could  be  subserved 
by  a  shipment  of  the  other,  seeing  that  both  metals,  when  coined 
would  be  equally  legal  tender  in  all  countries  and  that  coinage 
everywhere  would  be  unlimited,  and  subject  to  the  same  charges  for 
both  metals.  Nor  would  the  condition  of  the  stock  on  hand  alter 
the  ratio.  Although  this  stock  consisted  nearly  entirely  of  silver, 
and  very  little  of  gold,  still  would  a  pound  of  silver  always  buy  a 
pound  of  gold,  so  long  as  the  universal  law  rendered  the  one 
equally  as  effective  as  the  other  in  the  payment  of  debts.  The  mar- 
ket and  the  legal  prices  would  always  be  the  same." 

Sec.  29.  Del  Mar  in  his  ''Money  and  Civilization," 
published  in  London  in  1888  (page  104),  after  discussing 
the  demonetization  of  silver  by  Prussia  and  its  probable 
effect  on  the  value  of  silver  says: 

"  Had  France  and  the  United  States  not  also  closed  their  mints  to 
silver,  even  this  action  of  Prussia  would  apparently  have  had  no  effect 
upon  its  value;  but  France,  out  of  hatred  for  her  victorious  enemy, 
unwisely  refused  to  coin  its  rejected  silver,  and  this  proceeding  was 
rendered  effective  by  the  clandestine  alteration  of  the  mint  statutes 
of  the  United  States." 

Sec.  30.  I  also  quote  from  the  same  book,  page  129, 
the  following: 

"At  the  beginning  of  the  century  [sixteenth  century]  the  ratio  of 
the  precious  metals  in  the  coinages  of  Spain  was  13 >^  for  1,  and 


RATIO  BETWEEN  THE  METALS  21 

owing  to  the  fact  that  Spain  was  then  the  principal  coining  nation 
of  the  world,  she  was  able  to  determine  the  ratio  for  all  other 
nations.  In  other  words,  13 >^  had  become  the 'mer kef  rate  for 
the  commercial  world,  because  it  had  previously  been  made  the 
legal  rate  in  the  foremost  coining  country  of  the  time.  This  posi- 
tion it  was  soon  for  Portugal  to  assume.  The  Spaniards  had  found 
no  great  placer  fields  in  New  Spain;  the  Portuguese  found  one  in 
Brazil;  and  as  gold  in  placers  is  much  more  easily  obtained,  and  a 
greater  number  of  people  can  be  worked  together  upon  it  at  once 
than  upon  mines  of  silver,  a  vast  supply  of  the  more  precious  metal 
soon  made  its  way  to  Portugal.  Flushed  with  this  great  and 
sudden  wealth,  and  confident  that  in  a  contest  between  rapidly  pro- 
ducing gold  placers  and  and  slowly  producing  silver  mines  the  influ- 
ence of  the  former  would  prevail,  Portugal  in  1688  determined  upon 
the  bold  stroke  of  coining  its  gold  at  1  to  16  in  silver,  and  thus  com- 
pelling those  Spaniards  who  preferred  the  more  precious  metal  to 
pay  nearly  15  per  cent,  more  for  it  than  the  value  they  had  fixed 
upon  it  in  their  own  coinages.  Such  was  the  force  of  this  measure, 
that  two  years  later  the  Spaniards  were  fain  to  adopt  the  Portuguese 
ratio,  and  thus  relinquish  one-seventh  of  the  exchange  value  of  the 
metal  which  now  formed  the  main  portion  of  the  American  product. 
This  example  is  only  one  of  many  which  history  affords  to  prove 
that  the  ratio  between  the  metals  is  not  all  influenced  by  their 
relative  production,  but  altogether  by  law— not  the  law  of  weak 
nations,  but  the  law  of  strong  ones.  It  will  be  found  that  whenever 
the  ratio  has  been  changed  by  such  nation,  they  enhanced  the 
value,  not  of  the  scarcer,  but  of  the  more  plentiful  metal;  in  other 
words,  of  that  metal  over  the  production  or  coinage  of  which  they 
themselves  possessed  the  control."  (See  also  Encyclopsedia  Brit- 
tanica,  vol.  22,  p.  73,  also  Money  and  Civilization,  pp.  217,  218.) 

Sec.  31.  It  has  been  claimed,  and  even  now  is 
asserted,  by  some  of  the  advocates  of  the  gold  standard, 
that  the  tendency  has  been  ever  since  the  Christian 
Era  for  silver  to  depreciate  in  value  as  measured  by  gold. 
This  is  not  true;  on  the  contrary  sometimes  one  of  the 
metals  has  been  raised  In  value,  and  sometimes  the  other, 
but  whenever  changes  have  occurred,  they  have  been 
brought  about  by  legal  enactment. 


22  BIMETALLISM 

Sec.  32.  Although  I  have  already  quoted  extensively 
from  Del  Mar,  I  cannot  refrain  from  making  one  more 
quotation  from  his  "  Money  and  Civilization,"  page  217, 
in  regard  to  these  reckless,  unwarranted,  and  untruthful 
statements.     He  says: 

"  The  men  who  make  such  reckless  assertions  are  the  men  who 
have  caused  all  the  present  trouble  about  silver.  They  are  CON- 
CEITED PROFESSORS  OF  A  PRETENDED  POLITICAL  ECONOMY, 
CHARLATANS,  WHO  TEACH  EVERYTHING  AND  LEARN  NOTHING, 
IMPOSTORS  WHO  THRIVE  UPON  THE  CREDULITY  AND  INDIF- 
FERENCE OF  A  WORLD  TOO  BUSY  IN  EARNING  MONEY  TO 
STUDY  THE  SCIENCE  OF  ITS  HISTORY.  It  was  the  poverty  of 
Spain  in  1688  and  the  ignorance  of  Germany  in  1870  that  lowered 
the  value  of  silver  upon  the  only  two  great  occasions  when  it  fell 
at  all." 

He  also  says,  in  reply  to  the  assertion  that  it  will 
require  a  concert  of  the  great  nations  to  restore  silver 
to  its  former  position: 

"  It  did  not  require  a  concert  of  the  nations  to  break  down  the 
ratio,  and  it  needs  no  concertto  restore  it."  "  EITHER  ONE  OF  THE 
FOUR  LEADING  NATIONS  CAN  DO  IT."  (See  also  p.  219,  "  Money 
and  Civilization.") 

Sec.  33.  Such  an  opinion  from  Del  Mar,  the  best 
informed  man  that  the  world  has  ever  produced  on  the 
History  of  the  Precious  Metals  and  the  Science  of  Money, 
is  worth  more  than  the  opinions  of  a  thousand  such  men 
as  Wells,  Atkinson,  Laughlin,  Giffen,  and  other 
champions  of  the  gold  standard,  who  are  so  aptly  described 
in  the  quotation  above  given. 

Sec.  34.  If  the  law  can  make  a  dollar  stamped  upon 
paper  equal  in  value  to  a  dollar  stamped  upon  gold,  with- 
out any  regard  to  the  value  of  either  the  paper  or  the 
gold  upon  which  the  stamp  is  placed  and  on  which  the 
money   function    is   conferred,   does   it   not    necessarily 


RATIO  BETWEEN  THE  METALS  23 

follow  that  it  can  make  a  dollar  stamped  upon  silver 
equal  in  value  to  a  dollar  stamped  upon  gold,  without  any 
regard  to  the  value  of  the  gold  or  silver  bullion? 

Sec.  35.  In  proof  of  the  fact  that  an  inconvertible 
paper  money  can  be  maintained  at  a  parity  with  gold  and 
may  be  forced  to  a  premium  in  gold,  I  quote  McCulloch 
Com.  Die.  pp.  68-69,  the  following: 

*'  That  inconvertible  or  irredeemable  notes  can  be  carried  to  a 
premium  in  metal  coins  of  the  same  denomination  is  proved  by 
numerous  instances  in  the  monetary  history  of  countries  where  both 
notes  and  coin  were  co-ordinate  legal  tenders.  When  the  notes  are 
exclusive  legal  tenders,  they  may  be  carried  by  means  of  contraction 
or  limitation  to  any  desired  premium  in  coins."  (See  Sec.  179, 
this  volume). 

There  are  numerous  instances  in  which  inconvertible 
paper  money  has  been  carried  to  a  premium  in  gold  coins. 
The  same  principle  that  will  force  gold  to  a  premium  in 
paper  money,  will,  if  applied  to  paper  money,  force  it  to  a 
premium  in  gold.  It  will  be  found  that  whenever  and 
wherever  gold  has  commanded  a  premium  over  inconver- 
tible paper  money  issued  by  any  responsible  government, 
that  the  paper  money  has  been  over-issued,  or  that  it 
was  not  fully  invested  with  the  money  function,  or  that 
the  law  permitted  the  people  to  discriminate  against  it  by 
making  contracts  payable  specifically  in*  gold  or  silver 
coins.  Reverse  these  laws,  make  paper  money  a  full 
legal  tender  for  all  purposes,  limit  the  issue  of  paper 
money  to  an  amount  not  in  excess  of  the  distributive 
share  of  the  world's  money  that  the  issuing  country,  in 
proportion  to  its  population  and  business,  could  retain 
within  its  borders,  make  the  paper  money  a  full  tender 
for  all  purposes,  deprive  metallic  money  of  its  legal  tender 
power,  or  make  it  a  legal  tender  for  certain  specific 
purposes  only,  or  allow  it  to  be  discriminated  against  in 


24  BIMETALLISM 

private  contracts  and  paper  money  will  go  to  a  premium 
in  gold  or  silver  coins. 

Sec.  35a.  In  commenting  on  the  fact  that  in  many 
cases  paper  money  had  commanded  a  premium  in  gold, 
the  Indian  Currency  Commission  in  their  report  in  1893, 
Sec.  92,  page  34,  says: 

"  The  case  of  Brazil  is  perhaps  the  most  remarkable  of  all,  as 
showing  that  a  paper  currency  without  a  metallic  basis,  may  if  the 
credit  of  the  country  is  good,  be  maintained  at  a  high  and  fairly 
steady  exchange,  although  it  is  absolutely  inconvertible,  and  has 
been  increased  by  act  of  the  government  out  of  all  proportion  to  the 
growth  of  population  and  of  its  foreign  trade.  *  *  * 

The  Brazilian  standard  coin  is  the  miireis,  the  par  gold  value  of 
which  is  27d.  A  certain  number  were  coined,  but  have  long  since 
left  the  country,  and  the  currency  is,  and  has  since  1864  been, 
inconvertible  paper.  The  inconvertible  paper  was  more  than  doubled 
between  1865  and  1888,  but  the  exchange  was  about  the  same  at 
the  two  periods,  and  very  little  below  the  par  of  27d.  It  had  gone 
down  to  14d.  in  1868,  the  date  of  the  war  with  Paraguay,  but  had 
risen  again,  and  was  in  1875  as  high  as  28^d.  (A  premium  of 
l}id.  on  27d.  would  be  a  trifle  more  than  5  per  cent,  premium  in 
gold  that  the  inconvertible  paper  miireis  commanded  in  1875)." 

For  numerous  instances  in  which  an  inconvertible  paper 
money  has  commanded  a  premium  in  gold  coin  the  reader 
is  referred  to  Ricardo,  John  Stuart  Mill,  McCulloch,  etc. 

Sec.  35b.  A  bimetallic  law  does  not  assume  to  fix  the 
value  of  gold  and  silver  bullion,  or  even  to  fix  the 
relative  value  between  them.  It  fixes  only  the  ratio  at 
which  they  may  be  coined  into  money  and  makes  the 
money,  so  coined,  a  full  legal  tender  for  all  debts,  public 
and  private,  and  gives  the  debtor  the  option  to  pay  in 
money  coined  from  either  of  the  metals  at  the  ratio  fixed, 
and  when  this  is  done,  the  value  will  take  care  of  itself. 
With  such  a  law  admitting  both  metals  to  unlimited 
coinage  in  force  in  any  great  commercial  nation,  and  with 


RATIO  BETWEEN  THE  METALS  25 

the  option  lodged  with  the  debtor  to  use  money  coined 
from  either  metal  in  the  payment  of  debts,  it  would  be 
impossible  for  either  of  them  to  fall  below  the  coinage 
ratio,  or  to  rise  much  above  it,  because  if  there  were  any 
considerable  rise  created  by  demand  for  use  in  the  arts 
and  manufactures,  or  for  exportation,  coin  would  be 
melted  for  such  uses. 

Sec.  36.  Mr.  Groesbeck,  one  of  the  American  dele- 
gates to  the  International  Monetary  Conference  of  1878, 
in  a  speech  delivered  before  the  Conference  (see  page 
109),  said: 

"  If  we  can  keep  an  equilibrium  of  value  between  gold  and  silver, 
all  nations  will  be  substantially  upon  both  metals.  Gold  will  be  as 
valuable  as  Silver  everywhere,  and  Silver  as  valuable  as  Gold.  It 
is  idle  to  theorize  that  this  cannot  be  done.  We  know  it  has  been 
done.  Throughout  the  entire  past  up  to  1873,  both  metals  were  in 
equal  use  as  money,  and  kept  together  evenly  enough.  Now  and 
then,  at  long  intervals,  the  relation  between  them  was  slightly 
changed,  but  the  change  was  easily  made,  and  without  noticeable 
embarrassment.  The  change  last  made  in  Europe,  fixing  the 
relation  at  1  in  weight  of  gold  to  15>^  in  weight  of  silver,  stood  the 
trial  for  more  than  three-quarters  of  a  century.  In  all  that  time  the 
slight  differences  in  the  market  value  in  the  metals  did  not  amount 
to  a  serious  disturbance.  At  one  time  one  metal  may  have  been  at 
a  slight  premium;  at  another  time,  the  other,  but  their  average 
value  was  about  the  same.  It  is  worthy  of  notice,  that  throughout 
the  past,  and  up  to  the  middle  of  the  present  century,  it  was  never 
suggested  by  any  writer  or  statesman  that  either  of  the  metals 
should  be  generally  abandoned  because  of  the  difficulty  of  keeping 
them  sufficiently  equalized.  THIS  IS  THE  LESSON  OF  MANY 
CENTURIES,  and,  theorize  as  we  may,  what  has  been  done  in  the 
past  can  be  done  in  the  future;  and  instead  of  splitting  hairs  about 
the  Single  or  the  Double  Standard,  let  us  rather  walk  in  the  light 
of  the  experience  of  thousands  of  years." 

Sec.  37.  Del  Mar,  in  his  **  Monetary  Systems,"  page 
63,  calls  attention  to  the  fact  that  there  are  four  distinct 
periods  in  the  history  of  this  relation: 


26  BIMETALLISM 

"  First — The  period  from  the  accession  of  Julius  Csesar  to  the 
fall  of  the  Roman  or  Greek  Empire  in  1204,  during  which  time  the 
Roman  government  by  monopolizing  the  coinage  of  gold  and  fixing 
the  ratio  between  gold  coins  and  silver,  whether  coined  or  otherwise, 
at  12  for  1,  kept  it  constant  and  unaltered  at  that  figure.  As  during 
the  same  interval  the  ratio  in  the  Orient  and  the  Arabian  States 
was  about  6>^  for  1,  and  in  the  Gothic  States,  8  for  1,  some 
variation  from  the  Roman  ratio  is  to  be  observed  near  the  frontiers 
of  the  Empire,  but  not  elsewhere. 

"Second— The  period  from  the  fall  of  Constantinople  to  the 
enactment  of  Individual,  Private,  or  Free  Coinage  in  Holland, 
England  and  other  States  in  the  sixteenth  and  seventeenth 
centuries.  During  this  interval  the  various  princes  of  the  Occident 
began  to  coin  gold,  each  for  himself,  and  they  fixed  the  ratio  to  suit 
their  own  interest  or  necessities.  This  period  is  characterized  by 
the  wildest  dissonance  of  the  ratio.  It  was  a  contest  on  the  one 
hand,  between  monarchs,  who  alternately  raised  the  value  of  their 
gold  coins  to  the  value  of  nearly  twenty  times  their  weight  in  silver 
(as  in  France  in  1313)  and  raised  their  silver  coins  to  the  value  of 
an  equal  weight  in  gold  (as  in  France  in  1359) ;  and,  on  the  other 
hand,  their  subjects  and  foreigners,  who,  until  they  adopted 
measures  of  avoidance  or  reprisal,  were  made  the  victims  of  these 
frequent  and  ruinous  changes  of  value. 

''  Third — The  period  from  the  adoption  of  individual  or  free 
coinage  to  the  years  1867-75.  The  principal  States  of  the  Occident 
ceased  to  coin  silver  for  individual  account  at  the  dates  last 
mentioned.  During  this  interval  the  ratio  of  the  value  between 
gold  and  silver  was  the  mint  price,  or  the  result  of  a  competition 
between  the  mints  of  the  principal  States.  For  example,  the  value 
of  gold  in  silver  during  this  interval,  never  rose  above  the  highest 
price  paid  for  it  at  any  important  mint,  and  never  fell  below  the 
price  paid  for  it  at  any  other  important  mint.  In  other  words, 
nobody  gave  more  nor  less  in  one  metal  for  the  other  than  the 
mints  gave,  and  the  mints  gave  whatever  the  law  directed.  The 
so-called  'market  value'  of  this  period  was  simply  what  may  be 
termed  the  international  mint  ratio. 

"  Fourth— The  period  since  1867-75  when  silver  was  being  coined 
by  the  principal  States  on  their  own  account  alone,  there  arose  in 
the  West  for  the  first  time  since  the  establishment  of  free  coinage, 
a  general  market  value  between  gold  and  silver,  entirely  distinct 
from,  and  having  only  a  remote  relation  to  their  mint  value." 


RATIO  BETWEEN  THE  METALS  27 

Sec.  38.  Julius  Caesar  established  the  Roman  ratio  of 
12  to  1,  and  this  ratio  remained  unchanged  for  thirteen 
centuries.  During  all  this  time  the  gold  coinage  of  the 
Roman  Empire  was  monopolized  by  the  Basileus.  The 
various  provinces  under  the  dominion  of  Rome  were  per- 
mitted;'to  coin  silver  at  the  ratio  of  12  to  1;  and  silver 
either  in  coin  or  as  bullion  could  be  used  only  in  the 
payment  of  debts,  of  fines,  taxes  or  revenue  due  the 
Government  at  that  ratio,  but  at  that  ratio  it  could  be 
used,  whether  coined  or  uncoined. 

Sec.  39.  Since  the  downfall  of  Constantinople  in  1204, 
there  have  been  numerous  changes  in  the  ratio,  and  while 
some  of  the  changes  unquestionably  have  been  specu- 
lative on  the  part  of  the  King,  most  of  them  without 
doubt  were  made  for  the  purpose  of  attracting  one  or  the 
other  of  the  metals,  or  to  make  the  ratio  more  nearly 
correspond  with  that  of  the  surrounding  nations. 

Sec.  40.  From  1493  to  1640,  the  amount  of  silver 
produced  from  the  mines  of  the  world  was  46,200  tons 
and  the  amount  of  gold  produced  from  the  mines  of  the 
world  was  about  1,125  tons,  or  about  forty-one  times  as 
much  silver  as  gold.  If  the  amount  of  production  con- 
trolled the  relative  value,  the  ratio  during  this  period 
would  have  been  41  to  1,  while  we  know  the  ratio 
during  this  period  ranged  from  13^  to  1  to  16  to  1, 
most  of  it  coined  at  the  former  ratio. 

Sec.  41.  From  1620  to  1690,  Spain  obtained  about  355 
tons  of  gold  and  24,720  tons  of  silver,  or  about  seventy  times 
as  much  silver  as  gold.  If  the  amount  of  the  production  con- 
trolled the  ratio,  then  the  ratio  during  this  period  should 
have  been  70  to  1,  yet  the  coinage  ratio  during  all  this 
time  in  none  of  the  European  countries  was  below  16  to  1, 
and  in  most  of  them  it  was  14  or  15  to  1.  (See  '*  Money 
and  Civilization  "  page  102). 


28  BIMETALLISM 

Sec.  42.  Coming  down  to  the  present  century,  we 
find  that  from  the  commencement  of  the  present  century 
to  1848,  the  value  of  the  silver  produced,  rated  at  its 
coinage  value,  was  about  two  and  one-half  times  that  of 
the  value  of  gold;  so  that,  if  the  amount  of  production 
controlled  the  value,  the  ratio  should  have  been  39  to  1; 
and  that  from  1848  to  1870  the  value  of  the  gold  produced 
was  three  times  that  of  the  value  of  the  silver  produced, 
so  that,  if  the  amount  produced  controlled  the  ratio,  the 
ratio  during  this  period  should  have  been  5  to  1,  and  yet 
we  know,  as  a  matter  of  fact,  that  during  both  of  these 
periods,  that  is  from  1800  to  1870,  the  ratio  between  gold 
and  silver  remained  comparatively  stable  at  1S}4  of  silver 
to  one  of  gold.  The  divergence  between  the  metals 
during  that  time  never  exceeded  5  per  cent,  and  seldom 
exceeded  1  or  2  per  cent,  and  such  fluctuations  in  value, 
when  they  did  occur,  were  occasioned  by  extraordinary 
demand  arising  from  local  causes,  by  mint  charges,  costs 
of  transportation,  insurance,  commissions,  etc. 

Sec.  43.  From  the  foregoing  historical  facts  is  it  not 
conclusively  established  that  the  ratio  between  the  metals 
is  not  controlled — in  fact,  is  not  influenced  at  all  by  the 
relative  amounts  of  gold  and  silver  produced?  Since  the 
commencement  of  the  present  century  it  appears  that 
over  a  long  series  of  years  the  value  of  the  silver  produced 
was  2}^  times  that  of  gold,  and  over  another  long  series 
of  years  the  value  of  the  gold  produced  was  3  times  that 
of  the  silver,  and  yet  the  coinage  ratio  remained 
unaffected.  In  the  discussion  of  the  cost  of  the  precious 
metals,  we  have  seen  that  the  cost  of  the  production  of 
either  of  the  metals  has  no  influence  whatever  on  their 
relative  values.  In  the  discussion  of  the  influence  of  the 
bimetallic  law  of  France,  we  shall  show  that  this  law  for 
more  than  three-quarters  of  a  century  held  the  metals 


RATIO  BETWEEN  THE  METALS  29 

together  at  a  ratio  oilS%  to  1,  that  in  France  there  was 
no  fluctuation  in  the  money  power  of  gold  and  silver  coins 
coined  under  the  bimetallic  law  in  France,  and  that  the 
fluctuation  in  the  value  of  gold  and  silver  bullion  in 
France  never  exceeded  that  accounted  for  by  the  dif- 
ference in  the  mint  charges  for  fabricating  gold  and  silver 
coins;  and  that  the  fluctuations  in  silver  bullion  outside 
of  France  never  exceeded  the  cost  of  transportation  to  the 
French  mint,  insurance,  commissions,  mint  charges, 
interest  on  money  temporarily  locked  up,  and  other 
incidental  charges. 

Sec.  44.  I  insist  that  the  history  of  Bimetallism 
clearly  establishes  the  fact  that  neither  of  the  metals  can 
fall  in  value  below  the  coinage  ratio  in  any  country  main- 
taining free  coinage  of  both  metals  at  a  certain  fixed  ratio, 
provided  such  country  is  able  to  consume,  that  is,  to  coin 
and  float  as  money,  all  of  either  metal  that  can  by  any 
possibility  be  presented  at  its  mints  for  coinage.  There 
may  be  slight  fluctuations  in  the  relative  value  of  the 
metals  in  other  countries  equal  to  the  cost  of  transporta- 
tion, insurance,  commissions,  loss  of  interest  while  in 
transit,  and  other  incidental  expenses;  but  if  the  coinage 
is  gratuitous,  or  if  there  is  an  equal  ad  valorem  charge  for 
the  mintage  of  both  metals,  and  the  demand  is  unlimited 
in  the  country  thus  coining,  there  can  be  no  fluctua- 
tion in  any  country  in  the  relative  values  of  the  metals ' 
greater  than  would  be  required  to  cover  the  above 
mentioned  items  of  cost  and  charges.  It  would  not  be 
possible  for  the  value  of  either  metal  to  fall  below  the 
mint  price  in  the  country  so  coining  both  metals;  nor 
could  it  rise  very  much  above  it,  as  any  considerable  rise 
would  cause  the  coins  of  the  metals  so  rising  to  be  melted. 

And  it  is  unquestionably  true  that,  by  an  international 
agreement,  a  ratio  of  1  to  1  could  be  maintained  without 


30  BIMETALLISM 

fluctuation  in  the  relative  values  of  the  two  metals  equally 
as  well  as  one  of  15>^  to  1,  or  of  30  to  1;  that  it  is  not  the 
relative  amount  of  production,  nor  the  cost  of  production, 
nor  the  amount  of  either  of  the  metals  in  stock,  nor  of  all 
these  combined,  that  fixes  and  maintains  the  relative 
values  of  the  metals,  but  the  law  and  the  law  only; 
and  it  does  this  by  creating  a  demand  for  the  metals,  by 
setting  an  economic  force  in  motion,  by  providing  that  the 
metals  shall  be  treated  on  terms  of  equality,  that  they 
shall  have  equal  access  to  the  mint,  and  that  when  coined 
into  money  the  coins  of  each,  at  the  ratio  fixed,  shall  be 
equally  clothed  with  the  money  function  for  all  purposes. 
When  this  is  done  it  would  be  as  absolutely  impossible  for 
them  to  fluctuate  in  value,  as  measured  by  each  other,  as 
it  would  be  for  two  gold  coins  of  equal  weight  and  fine- 
ness to  be  unequal  in  value.  Under  a  ratio  of  1  to  1,  it  is 
quite  probable  that  but  little  gold  would  be  coined  into 
money.  The  value  of  gold  for  other  than  monetary  pur- 
poses might  and  probably  would  exceed  its  value  for 
coinage  purposes.  If  it  did,  its  consumption  in  the  arts 
and  for  mechanical  purposes  would  consume  the  entire  or 
nearly  the  entire  output.  But  any  gold  that  might  be 
coined  into  money  under  an  international  agreement  of 
1  to  1  would  have  no  greater  value,  as  money,  than  an 
equal  weight  of  silver  so  coined. 


CHAPTER  IV. 


EXPORTATION  OF  THE  PRECIOUS  METALS. 

Sec.  45.  It  is  the  balance  of  international  trade  that 
causes  one  or  the  other  of  the  metals  to  be  exported  from 
one  country  to  another,  and  it  is  the  difference  in  the 
ratio  of  coinage  in  the  respective  countries  that  determines 
which  of  the  metals  shall  be  taken  for  export. 

Sec.  46.  Sir  Isaac  Newton  in  his  report  as  Master  of 
the  Mint  to  the  Right  Hon.  the  Lords'  Commissioners  of 
his  Majesty's  Treasury,  dated  September  27,  1717  (I 
quote  from  Appendix  to  "Colloquy  on  Currency,"  page 
XIV)  says: 

"  It  appears  by  experience  as  well  as  by  reason,  that  silver  flows 
from  those  places  where  its  value  is  lowest  in  proportion  to  gold,  as 
from  Spain  to  all  Europe,  and  from  all  Europe  to  the  East  Indies, 
China  and  Japan;  and  that  gold  is  most  plentiful  in  those  places  in 
which  its  value  is  highest  in  proportion  to  silver,  as  in  Spain  and 
England. 

'Mt  is  the  demand  for  exportation  which  hath  raised  the  price  of 
exportable  silver  about  2d.  or  3d.  in  the  ounce  above  that  of  silver 
in  coin,  and  hath  thereby  created  a  temptation  to  export  or  melt 
down  the  silver  coin,  rather  than  give  2d.  or  3d.  more  for  foreign 
silver;  and  the  demand  for  exportation  arises  from  the  higher  price 
of  silver  in  other  places  than  in  England  in  proportion  to  gold;  that 
is,  from  the  higher  price  of  gold  in  England  than  in  the  other  places 
in  proportion  to  silver;  and  therefore  may  be  diminished  by  lowering 
the  value  of  gold  in  proportion  to  silver.  If  gold  in  England  or 
silver  in  East  India  could  be  brought  down  so  low  as  to  bear  the 
same  proportion  to  one  another  in  both  places,  there  would  be  here 


32  BIMETALLISM 

no  greater  demand  for  silver  than  for  gold  to  be  exported  to  India; 
if  gold  were  lowered  only  so  as  to  have  the  same  proportion  to  the 
silver  money  in  England  which  it  hath  to  silver  in  the  rest  of 
Europe  there  would  be  no  temptation  to  export  silver  rather  than 
gold  to  any  other  part  of  Europe.  And  to  compass  this  last,  there 
seems  nothing  more  requisite  than  to  take  off  about  lOd.  or  12d. 
from  the  guinea;  so  that  gold  may  bear  the  same  proportion  to  the 
silver  money  in  England,  which  it  ought  to  do  by  the  course  of 
trade  and  exchange  in  Europe;  but  if  only  6d.  were  taken  off  at 
present,  it  would  diminish  the  temptation  to  export  or  melt  down 
the  silver  coin;  and  by  the  effects  would  shew  hereafter  better  than 
can  appear  at  present,  what  further  reduction  would  be  most  conve- 
nient to  the  public. 

"  In  the  last  year  of  King  William,  the  dollars  of  Scotland,  worth 
about  4s.  6)4d.,  were  put  away  in  the  north  of  England  for  5s,  and 
at  this  price  began  to  flow  in  upon  us;  I  gave  notice  thereof  to  the 
Lords  Commissioners  of  the  Treasury;  and  they  ordered  the  collec- 
tors of  taxes  to  forbear  taking  them;  and  thereby  put  a  stop  to  the 
mischief. 

"At  the  same  time  the  louis  d'ors  of  France,  which  are  worth  but 
17s.  and  3  farthings  apiece,  passed  in  England  at  17s.  6d.;  1  gave 
notice  therefore  to  the  Lords  Commissioners  of  the  Treasury;  and 
his  late  majesty  put  out  a  proclamation  that  they  should  go  at  but  I7s; 
and  thereupon  they  came  to  the  mint;  and  ;£1 ,400,000  were  coined 
out  of  them;  and  if  the  advantage  of  5>^d.  in  a  louis  d'or  sufficed  at 
that  time  to  bring  into  England  so  great  a  quantity  of  French 
money,  and  the  advantage  of  3  farthings  in  a  louis  d'or  to  bring  it 
to  the  mint,  the  advantage  of  9;^d.  in  a  guinea  or  above,  may  have 
been  sufficient  to  bring  the  great  quantity  of  gold,  which  has  been 
coined  in  these  last  fifteen  years,  without  any  foreign  silver. 

"  Some  years  ago,  the  Portugal  moidores  were  received  at  the  west 
of  England  at  28s.  apiece;  upon  notice  from  the  mint  that  they  were 
worth  only  about  27s.  7d.  the  Lords  Commissioners  of  the  Treasury 
ordered  their  receivers  of  taxes  to  take  them  at  no  more  than  27s. 
6d.  Afterwards,  many  gentlemen  in  the  west  sent  up  to  the 
treasury  a  petition  that  the  receivers  might  take  them  again  at  28s. 
and  promised  to  get  returns  for  this  money  at  that  rate;  alleging 
that  when  they  went  at  28s.  their  country  was  full  of  gold  which 
they  wanted  very  much;  but  the  commissioners  of  the  treasury, 
considering  that  at  28s.  the  nation  would  lose  5d.  apiece,  rejected 
the  petition;  and  if  an  advantage  to  the  merchant  of  5d.  in  28s.  did 


EXPORTATION  OF  THE  PRECIOUS  METALS       33 

pour  that  money  upon  us,  much  more  hath  an  advantage  to  the 
merchant  of  9)4d.  in  a  guinea,  or  above,  been  able  to  bring  into  the 
mint  great  quantities  of  gold,  without  any  foreign  silver;  and  may 
be  able  to  do  it  still,  till  the  cause  be  removed." 

Sec.  47.  The  coinage  ratio  in  1717  in  England  was 
15.20  to  1;  France  was  15.04  to  1;  Germany  was  14.80 
to  1;  Netherlands,  14.45  to  1. 

The  difference  between  the  English  and  French  ratios 
was  but  .16,  which  was  an  undervaluation  of  silver  by 
England  as  compared  with  the  French  ratio  of  1^  cents 
on  an  ounce  and  yet  so  small  an  undervaluation  was 
sufficient  to  cause  the  exportation  of  English  silver  to 
France  and  French  gold  to  England  as  shown  by  Sir 
Isaac  Newton's  Report. 

Sec.  48.  In  examining  the  special  instances  cited  by 
Newton,  we  find  a  difference  in  the  valuation  of  5^d.  in 
the  French  louis  d'or,  which  was  worth  I7s.,  was  suffi- 
cient to  bring  into  England  a  large  amount  of  French  gold, 
and  that  a  refusal  to  receive  this  French  gold,  except  at  a 
discount  of  ^d.,  equal  to  an  actual  discount  of  about 
three-tenths  of  one  per  cent,  was  sufficient  to  force  it 
into  the  English  mint  for  recoinage.  We  also  find  that 
the  Portugese  moidores,  worth  27s.  7d.  would  not  circulate 
at  a  valuation  of  27s.  6d.  an  undervaluation,  of  less  than 
three-tenths  of  one  per  cent. 

Sec.  49.  I  have  quoted  quite  liberally  from  Sir  Isaac 
Newton's  Report;  not  only  from  his  recommendation,  but 
also  from  the  facts  cited  by  him  in  support  of  them.  I 
am  induced  to  do  this  not  only  on  account  of  his  eminent 
ability  as  an  economist  and  financier,  but  also  for  the 
further  reason  that  no  one,  I  think,  will  question  his  facts. 
This  report,  and  the  facts  therein  cited,  conclusively 
prove  that  a  difference  in  the  mint  ratio  in  different 
countries  will  cause  the  undervalued  metal  to  be  melted 


34  BIMETALLISM 

down,  or  exported  to  those  countries  giving  it  a  higher 
valuation,  and  that  a  slight  undervaluation  is  sufficient  to 
produce  this  result.  With  a  knowledge  of  these  facts  it 
ought  not  to  be  difficult  to  understand  why  gold  would 
not  circulate  as  money  in  the  United  States  between  1792 
and  1834,  when  it  was  undervalued  in  this  country  3^ 
per  cent  as  compared  with  the  European  ratio;  and  why 
silver  coins  were  exported  since  1834,  they  being  under- 
valued 3}^  per  cent,  under  the  law  of  1834  as  compared 
with  the  European  valuation. 

Sec.  50.  The  alternating  demand  for  first  one  and 
then  the  other  of  the  metals  has  not  been  caused  by  any 
general  preference  of  the  people  for  either  of  the  metals, 
nor  by  changes  in  the  cost  of  production,  nor  by  the 
relative  amounts  produced  but  by  the  arbitrary  decrees  of 
kings,  princes  and  legislatures  changing  the  ratios  at 
which  they  were  permitted  to  be  coined  into  money. 
Changes  in  the  ratio  have  sometimes  been  made  for 
speculative  purposes,  but  generally  for  the  purpose  of 
attracting  one  or  the  other  of  the  metals  into  the  nation 
making  the  change,  but  never  for  the  purpose  of  making 
the  ratio  coincide  more  nearly  with  the  relative  production 
of  the  two  metals.  On  the  contrary,  all  important  and 
radical  changes  in  the  ratio  have  been  made  in  favor  of 
the  more  abundant  metal,  that  is,  in  increasing  the  rela- 
tive value  of  the  metal  of  which  there  was,  at  the  time, 
the  greatest  production. 


CHAPTER  V. 


FIRST  SILVER  AND  THEN  GOLD  OVERVALUED   IN  THE 
UNITED  STATES. 

Sec.  51.  It  is  claimed  by  the  gold  standard  advocates 
that  it  is  impossible  to  hold  the  metals  together  by  virtue 
of  a  legal  ratio;  that  the  laws  of  commerce  are  superior  to 
any  legal  enactment;  that  repeated  attempts  have  been 
made  to  fix  a  legal  ratio  so  as  to  coincide  with  the  market 
value  of  the  metals,  and  that  all  such  attempts  have 
utterly  failed.  The  adoption  of  the  French  ratio  of  1B}4 
to  1  in  1803,  and  that  of  15  to  1  in  the  United  States  .in 
1792,  and  of  16  to  1  in  1834,  they  claim  were  such 
attempts. 

Sec.  52.  In  the  chapter  on  ''  Bimetallism  in  France  " 
(see  Chapter  XII),  it  will  be  seen  that  the  facts  do  not 
warrant  the  assertion  as  to  France,  and  I  now  propose  to 
show  that  it  is  not  true  as  to  the  United  States. 

Sec.  53.  In  1785  a  Committee  on  Coinage  and  Finance, 
previously  appointed,  reported  to  Congress  recommehding 
the  adoption  of  a  ratio  of  15  to  1.  (See  report  of  Com- 
mittee on  Finance  of  Continental  Congress,  vol.  26,  pp. 
537-560.)     Among  other  things  the  committee  says: 

"In  France  one  grain  of  pure  gold  Is  counted  worth  fifteen  grains 
of  silver.  In  Spain  sixteen  grains  of  silver  are  exchanged  for  one 
of  gold  and  in  England  15>^.  In  both  of  the  kingdoms  last 
mentioned,  gold  is  the  prevailing  money,  because  silver  is  under- 
valued.     In    France   silver   prevails.      SUNDRY    ADVANTAGES 


36  BIMETALLISM 

WOULD  ARISE  TO  US  FROM  A  SYSTEM  BY  WHICH  SILVER 
MIGHT  BECOME  THE  PREVAILING  MONEY.  THIS  WOULD 
OPERATE  AS  A  BOUNTY  TO  DRAW  IT  FROM  OUR  NEIGHBORS 
BY  WHOM  IT  IS  NOT  SUFFICIENTLY  ESTEEMED." 

Sec.  54.  This  committee  showed  that  the  ratio  of  15 
to  1  overvalued  silver,  but  it  recommends  that  ratio, 
because  in  the  opinion  of  the  committee,  "  sundry  advan- 
tages would  arise  to  us  from  a  system  by  which  silver 
would  become  the  prevailing  money."  The  United  States 
did  not  at  that  time  adopt  any  ratio,  but  in  1792  it  did 
adopt  the  ratio  of  15  to  1,  and  France  in  1792  was  coining 
at  the  ratio  of  15  ^^  to  1.  On  the  adoption  of  the  ratio  of 
15  to  1,  in  the  United  States  in  1792,  it  was  well  known 
that  silver  was  overvalued,  and  this  ratio  was  adopted  for 
the  express  purpose  of  attracting  silver,  it  being  believed 
that  silver  was  better  adapted  to  the  wants  and  demands 
of  the  people,  at  that  time,  than  gold. 

Sec.  55.  By  the  Coinage  Act  of  1834,  gold  was  over- 
valued. There  was  no  attempt  in  1834  to  make  the 
coinage  ratio  agree  with  the  ''market"  values  of  the 
bullion,  but  gold  was  purposely  overvalued  because  gold 
had  been  discovered  in  the  mountains  of  Georgia  and  the 
Carolinas,  and  extravagant  hopes  were  entertained  that 
immense  deposits  of  gold  would  be  found,  and  that  over- 
valuing gold  three  or  four  per  cent,  would  stimulate  its 
production.  The  propriety  of  raising  the  value  of  gold 
had  been  discussed  for  several  years.  In  1831  Albert 
Gallatin,  who  had  been  Secretary  of  the  Treasury  for 
eight  years  under  Thomas  Jefferson,  in  a  work  entitled 
"  Considerations  of  the  Currency,"  said: 

"  Another  consideration  in  favor  of  the  proposed  reform  of  our 
gold  coins.  It  seems  to  be  well  ascertained  that  the  United  States 
contains  some  of  the  most  extensive  deposits  of  gold  that  have  yet 
been  discovered.  ^t  *  *  ^  *        it  appears 

but  just  to  afford  to  those  employed  in  collecting  the  natural 
product,  a  certain,  and  the  highest,  home  market  of  which  it  is 
susceptible." 


OVERVALUATION  37 

Sec.  57.  In  the  early  days  of  the  Republic,  before 
wealth  dominated  every  department  of  the  Government, 
it  was  regarded  as  a  very  proper  thing  to  legislate  in 
favor  of  the  wealth  producer  and  secure  for  him  the  best 
market  possible,  but  in  1873,  when  a  large  amount  of 
silver  was  being  produced,  instead  of  legislating  to 
increase  or  even  sustain  its  value,  the  Act  of  February 
12  was  of  such  a  character  as, to  take  away  from  it  a 
part  of  its  value  and  degrade  it  as  a  money  metal,  by 
denying  it  access  to  the  mint. 


CHAPTER  VI. 


CONSUMPTION  IN  THE  ARTS. 

Sec.  58.  Of  course  no  one  knows  with  certainty  how 
much  gold  is  annually  consumed  in  the  arts  and  manufac- 
tures. Estimates,  however,have  been  made  by  trustworthy 
statisticians  that  the  consumption  for  other  than  monetary 
purposes  amounts  to  from  two-thirds  of  the  annual  pro- 
duction to  the  total  output.  Mr.  Soetbeer,  the  foremost 
statistician  of  the  age,  says  (p.  53): 

"  The  assumption  that  in  the  years  recently  passed,  together  with 
the  outflow  to  the  East,  and  the  still  prevalent  practice  of  hoarding, 
industrial  employment  has  materially  checked  the  increase  of  the 
monetary  gold  stock,  and  may,  presumably,  have  neariy  absorbed 
the  yearly  new  production  of  gold,  cannot,  it  is  true,  be  numerically 
demonstrated,  but,  on  the  other  hand,  just  as  little  will  it  be  possible 
to  demonstrate  its  incorrectness." 

Sec.  59.  Professor  Suess,  of  the  University  of  Vienna, 
in  his  work  on  "  The  Future  of  Silver,"  quotes  the  above 
paragraph  from  Dr.  Soetbeer,  and  then  says: 

**  This  view  I  share  entirely,  and  it  corresponds  to  the  present 
condition  of  affairs.  But  the  industrial  demand  Increases  from  year 
to  year  with  increase  of  wellbeing.  We  have  either  already 
reached  the  day,  or  approached  very  close  to  it,  when  mining  will 
yield  less  than  industry  consumes.  From  that  day  forward  the 
whole  new  production  no  longer  counts  for  monetary  needs,  and 
from  that  day  forward  industry  will  withdraw  from  the  stock  of 
money  an  amount  of  gold  increasing  annually  with  the  increase  of 
wellbeing." 


CONSUMPTION  IN  THE  ARTS  39 

Sec.  60.  Mr.  Giffen,  statistician  for  the  London  Board 
of  Trade,  in  his  book  entitled,  "  The  Case  Against  Bimet- 
allism "  (p.  85),  says: 

"  About  two-thirds  of  the  gold  annually  produced  is  taken  for  the 
arts;  and  if  the  consumption  of  India  is  included  *  *  then 
the  demand  for  gold  for  non-monetary  purposes  appears  almost 
equal  to  the  entire  annual  production." 

Sec.  61.  President  Andrews,  in  his  article  on  "  Falling 
Prices  "  printed  as  a  preface  to  his  **  Honest  Dollar," 
estimates  that  the  consumption  for  other  than  monetary 
purposes  in  the  year  1893  was  $108,565,000  out  of  a  total 
production  of  ;^155, 522,000,  which  leaves  $46,956,000  for 
coinage  purposes,  which  is  less  than  one-third  of  the 
year's  production,  and  which  would  not  much,  if  any 
more  than  keep  the  old  stock  good  from  loss  by  accident, 
abrasion,  etc. 

Sec.  62.  Sir  Guilford  Molesworth,  delegate  from 
British  India  to  the  International  Monetary  Conference  of 
1892  in  a  speech  delivered  before  the  Conference  Dec. 
6th,  1892,  said:  **  The  annual  supply  of  gold  scarcely 
exceeds  the  amount  required  for  industrial  purposes." 

Sec.  63.  In  Appendix  B,  of  the  third  report  of  the 
Royal  Commission  on  Trade,  Mr.  Palgrave  furnishes 
some  statistics  relative  to  the  amount  of  gold  and  silver 
money  in  the  world  and  the  amount  of  gold  and  silver 
annually  consumed  in  the  arts  and  manufactures.  His 
figures  are  based  mainly  on  the  estimates  of  Soetbeer, 
and  are  as  follows: 

Stock  of  gold  and  silver  money,  including  hoards,  in  the  civilized 
nations  of  the  world  in  1884 — 

Gold :£654,000,000— (equals  $3,270,000,000) 

Silver 437,000,000— (equals  $2,185,000,000) 

Production  in  1884— 

Gold :£19,S00,000— (equals  $  97,500,000) 

Silver 26,000,000— (equals  $130,000,000) 


-40  BIMETALLISM 

The  average  annual  consumption  of  gold  in  the  arts  and  manu- 
factures and  exports  to  the  East  (deducting  imports  therefrom)  for 
the  four  years  1881  to  1884  was  ^^16,500,000,  which  leaves  but 
^3,000,000  ($15,000,000)  of  new  gold  available  for  maintaining  or 
increasing  the  coinage,  and  for  hoarding. 

The  annual  consumption  of  silver  during  the  same  time,  in  the 
arts  and  manufactures  was  about  ^^4,500,000  ($22,500,000),  whilst 
the  net  annual  flow  of  silver  to  the  East  was  ^14,500,000  ($72,000,- 
000).  Thus  we  have  a  total  consumption  of  silver  for  non-monetary 
purposes  of  about  ^19,000,000  ($95,000,000),  leaving  a  balance  for 
coinage  purposes,  and  for  hoarding,  of  about  ;^7,000,000  ($35,000,- 
000).    (See  Monetary  Problems  304). 

Sec.  64.  By  the  phrase  **  Civilized  Nations  of  the 
World,"  1  understand  Mr.  Palgrave  includes  Europe, 
America,  and  Australia,  and  excludes  Asia. 

Sec.  65.  Jacob's  estimate  of  production  of  gold  and 
silver  from  1493  to  1809,  and  the  manner  of  its  consump- 
tion, is  given  in  Chapter  I,  Sec.  9  of  this  Volume.  Out 
of  a  total  production  of  ^1,360,600,000  he  estimates  that 
;^346,000,000  only  was  added  to  the  volume  of  money, 
and  that  the  '  remaining  ;^1, 014,000,000  was  lost  by 
abrasion  and  casualty,  exported  to  the  Orient  or  con- 
sumed in  the  arts  and  manufactures.  See  Chapter  I, 
Sec.  9,  for  particulars  as  to  the  manner  of  consumption. 

Sec.  66.  Alex.  Del  Mar,  without  doubt  the  best  in- 
formed man  living,  on  the  history  and  movement  of  the 
precious  metals,  in  his  work  entitled  "  A  History  of  the 
Precious  Metals  "  (pp.  184  and  185)  makes  the  following 
estimate;  he  says: 

"The  total  sum  of  the  supplies  to  Europe  up  to  1878  inclusive 
were  about  ^2,627 ,800,000.  To  this  must  be  added  /33 ,400,000, 
for  the  amount  of  specie  estimated  to  have  been  in  use  as  coin  in 
Europe  at  the  period  of  the  discovery  of  America.  The  total  of 
these  two  sums  is  ^^2,661, 200,000.  The  amount  of  coin  estimated 
to  have  been  in  the  Western  World  in  1876  was  ^700,000,000.   And 


CONSUMPTION  IN  THE  ARTS 


41 


at  the  present  time  [1880]  it  is  from  /"eoOjOOOjOOO  to  ^700,000,000. 
It  follows  that  of  the  total  supplies  nearly  ^"2,000,000,000  or  over 
70  per  cent,  has  been  lost,  consumed  in  the  arts  or  exported  to  Asia. 
"  Similar  calculations  made  up  to  previous  dates  determines  the 
proportion  of  consumption  to  production  to  have  been  as  shown  in 
the  following  table: 

SUMS  IN  MILLIONS  OF  POUNDS  STERLING 


Cumulative  Supplies 

Stock 

Cumulative  Con- 

Per cent  of  Con- 

Date 

to  date 

at  date 

sumption  to  date 

sumption  to  Supplies 
since  last  date 

1675 

509 

250 

259 

50 

1700 

592 

297 

295 

50 

1776 

1,054 

275 

797 

74 

1808 

1,314 

380 

935 

71 

1828 

1,441 

313 

1,128 

78 

1838 

1,510 

270 

1,240 

82 

1850 

1,675 

400 

1,275 

76 

1860 

2,040 

560 

1,480 

72 

1870 

2,365 

720 

1,645 

70 

1876 

2,564 

740 

1,824 

71 

"  From  this  calculation  it  appears  that,  within  the  past  century  the 
consumption  in  the  arts,  etc.,  and  for  exportation  to  Asia  has  never 
fallen  below  70  nor  risen  above  82  per  cent,  of  the  total  supplies  and 
this  only  at  one  period  of  unusual  metallic  dearth.  These  results 
appear  to  afford  ground  for  the  opinion  that,  hereafter,  as  hereto- 
fore, this  consumption  will  amount  to  about  three-fourths  of  the 
supplies;  but  such  an  opinion,  though  possibly  correct,  should  not 
be  adopted  without  further  examination." 

Sec.  67.  Del  Mar's  estimate  includes  both  of  the 
precious  metals,  and  it  is  a  well  known  fact,  conceded  by 
all  statisticians,  that  the  annual  consumption  of  gold  for 
other  than  monetary  purposes  is  much  greater,  in  propor- 
tion to  its  production,  than  is  that  of  silver.  The  proba- 
bilities are  that  the  estimates  of  Soetbeer,  Suess,  Giffen, 
Palgrave,  Del  Mar,  and  others,  that  the  total  annual 
product  of  gold  was  being  consumed  for  other  than  mone- 
tary purposes  was  true  in  1894  and  1895,  when  made,  and 
that  the  new  gold  then  being  coined  was  no  more  than 
sufficient  to  make  good  the  loss  by  abrasion,  casualty  and 


42  BIMETALLISM 

to  supply  the  demands  of  the  Orient  and  for  hoarding, 
and  that  the  world's  supply  of  gold  money,  available  for 
use,  was  not  being  increased.  Since  1894-5,  however, 
there  has  been  an  abnormal  increase  in  the  world's  pro- 
duction of  gold.  The  annual  output  has  nearly  doubled 
since  1893,  and  unquestionably  new  gold  has  been  coined 
into  money,  possibly  twenty-five  or  thirty  per  cent,  of  the 
total  output,  which  is  a  much  larger  per  cent,  than  was 
formerly  used  for  monetary  purposes. 

Sec.  68.  The  fact  that  during  the  past  400  years  25 
per  cent,  only,  or  even  less  than  25  per  cent,  of  the  gold 
and  silver  produced  has  been  coined  into  money,  and  that 
75  per  cent,  has  been  consumed  in  the  arts  and  manu- 
factures or  exported  to  the  Orient  is  a  startling  fact  to 
men  who  have  given  no  special  attention  to  the  money 
question.  They  naturally  conclude  that  if  ^400,000,000 
worth  of  gold  and  silver  bullion  is  being  annually  taken 
from  the  mines  and  placers  of  the  world,  then  $400,000,- 
000,  or  nearly  that  amount,  is  being  added  to  the  world's 
volume  of  money,  and  that  such  an  increase  is  sufficient 
to  keep  pace  with  the  increasing  population,  increasing 
development  and  extension  of  business  and  the  neces- 
sarily increasing  demand  for  money. 

Sec.  69.  They  lose  sight  of  the  fact  that  Asia  now  is, 
and  for  many  centuries  has  been,  a  sink  for  the  precious 
metals;  that  when  once  exported  to  Asia  they  are  forever 
lost  to  the  Western  World,  and  that  more  than  one-half 
of  the  gold  and  silver  produced  from  the  mines  and  placers 
of  the  world  since  1493  has  been  so  consumed.  The  gold 
imported  into  India  in  excess  of  that  exported  therefrom, 
as  shown  by  the  official  reports,  (see  Laughlin's  History 
of  Bimetallism  in  the  United  States,  pp.  346,  347),  from 
1855  to  1893,  a  period  of  thirty-eight  years,  amounted  to 
;^7ll, 523,000,  and  yet  the  financial   reports  during  all 


CONSUMPTION  IN  THE  ARTS  43 

that  time  do  not  show  that  there  was  during  that  time 
a  dollar  of  gold  money  in  India.  This  $711,000,000 
worth  of  gold  in  the  short  space  of  thirty-eight  years  was 
absorbed  by  the  people  of  India  for  jewelry,  for  trinkets 
of  various  kinds,  for  hoarding  and  for  sacerdotal  purposes, 
and  during  the  same  time  a  large  amount  of  silver  was 
consumed  in  the  same  manner.  What  is  true  of  India  is 
also  true  of  all  other  countries  in  Asia. 

Sec.  70.  The  gold  and  silver  imported  into  India, 
from  1855  to  1893,  in  excess  of  exports  therefrom, 
amounts  to  $2,274,088,000.  (See  Laughlin's  History  of 
Bimetallism  in  the  United  States,  pp.  346-347).  The 
World's  production  of  the  precious  metals  during  the 
same  time  as  shown  on  pages  194-195  of  the  1897  report 
of  the  Director  of  the  Mint  was,  gold  $3,502,003,000,  and 
silver  $4,589,096,000  the  total  production  for  the  38  years 
being  $8,091,099,000,  from  which  it  appears  that  28  per 
cent,  of  the  total  production  was  exported  to  India  alone. 
The  imports  into  other  Asiatic  countries,  to-wit:  China, 
Japan,  the  Straits  Settlement,  Siam,  etc.,  countries 
which,  taken  together,  have  more  than  $400,000,000 
more  money  than  India  has,  unquestionably  equals,  if  it 
does  not  exceed,  the  imports  into  India.  Supposing, 
however,  that  the  net  imports  of  the  precious  metals  into 
all  of  these  countries  is  no  more  than  the  Indian  import; 
even  then,  we  have  for  consumption  of  the  precious 
metals  in  Asia,  56  per  cent,  of  the  total  output.  Of  the 
remaining  44  per  cent,  one-half  is  consumed  in  the  arts 
and  manufactures,  leaving  less  than  25  per  cent,  for 
monetary  purposes  in  the  Western  World. 

Sec.  71.  The  finance  reports  of  the  United  States 
contain  no  special  estimate  of  the  amount  of  the  precious 
metals  consumed  for  other  than  monetary  purposes,  but 
facts  are  given  from  which  approximate  estimates  can 


44  BIMETALLISM 

be  made.     The  annual  report  of  the  Director  of  the  Mint 
for  1897,  pages  194-195,  gives  a  tabulated  statement  of 
the  world's  production  of  gold  and  silver  from  1493  up  to 
and  including  the  year  1896,  from  which  it  appears  that 
$8,983,320,600  of  gold  and  $10,556,700,800  of  silver  has 
been  produced,  which  makes  a  total  production  of  $19,- 
540,021,400.     On   pages  40-41,  of  the  same  report,  the 
Director   of  the   Mint  estimates   the   stock    of    metallic 
money  in  the  world  on  January  1,  1897,  at  $4,359,600,000 
in  gold  'coin  and  $4,268,300,000  in   silver   coin,   which 
would  give  us  a  total  of  $8,627,900,000  of  metallic  money, 
of  which  he  locates  $2,329,500,000  in  Asia.     Deducting 
from   the   total   stock   of  metallic  money,  the  money  in 
Asia,   we   have   $6,308,400,000   as  the  total  volume  of 
metallic  money  in  the  world  exclusive  of  that  held  in  Asia. 
In  order  to  determine  how  much  of  the  gold  and  silver 
produced   since   1493   has   been   added    to    the    world's 
volume   of  money,   we   must  deduct  from   the   present 
stock,  the  metallic  money  in  existence  in  1493,  which  is 
estimated  by  Jacob,  whose  estimate  is  generally  accepted 
as  approximately  correct,  at;^33,400,000,  or  $167,000,000, 
If  we  deduct  $167,000,000  for  the  total  metallic  money 
in  the  Western  World  in  1493,  we  have  $6,141,400,000, 
as  the  sum   added  to  the  world's  volume  of  metallic 
money  since  1493  exclusive  of  that  exported  to  Asia.     It 
thus  appears,  assuming  the  estimate  of  the  Director  of 
the  Mint  to  be  correct  as  to  the  amount  of  metallic  money 
now  in  existence,  that  of  the  $19,540,021,400  worth  of 
gold  and  silver  bullion  produced  since  1493,   $13,398,- 
621,400  has  been  used  for    non-monetary   purposes   or 
exported  to  the  Orient,  and  but  $6,141,400,000  has  been 
coined  into  money;  in  other  words  69  per  cent,  has  been 
consumed  in  the  arts  and  manufactures  or  exported  to 
Asia,  and  31  per  cent,  added  to  the  volume  of  money. 


CONSUMPTION  IN  THE  ARTS  45 

Sec.  72.  It  is  well  known,  however,  that  the  Director 
of  the  Mint  grossly  overestimates  the  metallic  money  of 
the  Western  World.  For  instance,  he  estimates  the 
silver  money  in  the  United  States  at  ^634,500,000,  (see 
report  1897,  p.  41),  and  he  shows  on  page  37  of  same 
report  that  this  estimate  includes  ^106,697,670  worth  of 
silver  bullion  which  is  not  money  at  all,  and  may  never 
become  money.  It  is  also  well  known  that  he  over- 
estimates by  more  than  $200,000,000  the  gold  coin  in  the 
United  States.  There  is  no  doubt  that  the  Director  of 
the  Mint  overestimates  the  metallic  money  of  the  West- 
ern World  more  than  $1,000,000,000,  but  even  assuming 
his  estimate  to  be  correct,  it  appears  that  69  per  cent, 
of  the  precious  metals  produced  since  1493  has  been 
used  for  non-monetary  purposes,  lost  by  casualty  and 
abrasion,  or  exported  to  the  Orient,  and  only  31  per 
cent,  added  to  the  money  of  civilization;  and  if  a  proper 
allowance  is  made  for  his  overestimate  of  the  amount  of 
metallic  money  in  existence,  it  will  be  seen  that  the 
estimates  of  Soetbeer,  Jacob,  Del  Mar,  Giffen,  Jones, 
Palgrave,  Suess,  and  other  statisticians  are  within  the 
limit,  and  that  fully  75  per  cent,  of  the  precious  metals 
are  so  consumed,  and  that  not  more  than  25  per  cent,  is 
added  to  the  volume  of  money,  and  that  the  relative 
proportion,  so  consumed,  of  gold,  is  greater  than  that  of 
the  silver,  and  also  that  the  proportion  consumed  for 
other  than  monetary  purposes  is  increasing  with  the 
increase  of  wellbeing. 

Sec.  73.  Notwithstanding  the  fact  that  it  is  well 
known  by  all  economists  that  but  a  small  per  cent,  of  the 
world's  production  of  gold  is  added  to  the  world's  volume 
of  money.  Professor  Laughlin,  (who  signs  himself  ''Head 
Professor  of  Political  Economy  in  the  University  of 
Chicago"),  in  his  book  entitled  ''The  History  -of 
Bimetallism  in  the  United  States,"  page  205,  says: 


46  BIMETALLISM 

"  Inasmuch  as  trustworthy  authorities  say  the  gold  product  will 
continue  on  the  present  great  scale  for  at  least  fifteen  years  (at  an 
annual  output  of  at  least  $220,000,000),  we  may  reasonably  look 
forward  to  an  addition  of  $3,000,000,000  in  our  stock  of  gold  during 
these  years,  or  an  amount  as  large,  if  not  much  larger  than,  the 
whole  gold  circulation  of  the  world  in  1850.  The  imagination  is 
challenged  to  picture  the  result  of  this  abundance,  and  it  is  not  too 
much  to  say  that  it  takes  away  whatever  force  may  have  been  left 
in  the  argument  of  the  bimetallists  that  gold  is  scarce  and  insufficient 
for  the  needs  of  trade." 

Sec.  74.  Can  it  be  possible  that  the  ''Head  Professor  " 
of  Political  Economy  in  the  University  of  Chicago  does 
not  know  that  a  small  per  cent,  only  of  the  gold  now 
being  produced,  or  hereafter  likely  to  be  produced,  is 
being  coined  into  money?  Can  it  be  possible  that  the 
"  Head  Professor"  never  read  the  statistics  published  to 
the  world  by  Humboldt,  Soetbeer,  Del  Mar,  Giffen, 
Palgrave,  Suess,  and  others,  and  reproduced  in  the 
Appendix  in  his  own  book  on  Bimetallism?  Can  it  be 
possible  that  the  Appendix  was  prepared  by  some  one 
other  than  the  **  Head  Professor,"  and  that  the  **  Head 
Professor"  never  read  it?  He  must  be  ignorant  of  the 
fact  stated  by  Suess  that  "  we  have  either  already  reached 
the  day  or  approached  very  close  to  it  when  mining  will 
yield  less  than  industry  consumes,  that  from  that  day  for- 
ward the  whole  new  production  no  longer  counts  for  mone- 
tary needs,  and  from  that  day  forward  industry  will  with- 
draw from  the  stock  of  money  an  amount  of  gold  increas- 
ing annually  with  the  increase  of  wellbeingJ^  The  **  Head 
Professor"  of  the  University  of  Chicago  is  either 
ignorant  of  these  facts,  or  he  is  dishonest,  and  is 
attempting  to  deceive  the  people. 


CHAPTER  VII. 


VALUE. 


Sec.  75.  In  my  article  on  Bimetallism  published  in 
the  Arena  for  June,  1896,  and  reproduced  in  the  Appen- 
dix to  this  volume,  I  discussed  the  question  of  value  and 
endeavored  to  prove,  and  I  think  I  succeeded  in  so  doing, 
that  there  was  no  such  thing  as  "intrinsic  value."  1 
shall  not,  in  this  chapter  enter  upon  a  discussion  of  this 
question,  but  shall  content  myself  with  citing  a  few  addi- 
tional authorities  in  support  of  the  principle  there  enunci- 
ated, and  refer  the  reader  to  the  arguments  there  adduced 
in  support  of  them. 

Sec.  76.  Walker  on  Money,  Trade  and  Industry, 
page  32: 

"  Value  is  not  a  property  of  anything.  It  arises  wholly  out  of 
relations  which  exist  between  things." 

Sec.  77.     Senator  Jones,  October,  1893,  speech,  p.  10: 

"Value  is  subjective,not  objective;  and  not  being  objective  it 
cannot  be  intrinsic." 

Sec.  78.  Senator  Jones  in  the  International  Monetary 
Conference  of  1892,  p.  255: 

"The  much  vaunted  'intrinsic'  value  of  gold  does  not  exist. 
The  idea  that  it  does  exist  is  founded  upon  a  misconception 
altogether  too  long  tolerated  regarding  the  meaning  of  the  term 
value.    Value  I  define  to  be:    HUMAN  ESTIMATION  PLACED  UPON 

desirable  objects  whose  quantity  is  limited  and  whose 
acquisition  involves  sacrifice. 


48  BIMETALLISM 

Sec.  79.  Senator  Jones  in  International  Monetary 
Conference,  p.  255: 

"  Value  is  subjective,  not  objective.  It  resides  not  in  the  article, 
but  in  the  mind.  It  is  the  degree  of  mental  estimation  in  which  the 
possessor  of  an  article  holds  the  qualities  possessed  by  the  article, 
as  modified  by  the  limitation  of  the  quantity  of  such  articles  and  the 
average  amount  of  sacrifice  necessary  to  obtain  them.  An  article 
may,  therefore,  have  estimable  qualities  that  are  intrinsic,  and 
for  which  the  possessor  may  value  or  esteem  it,  but  no  article  what- 
ever can  have  intrinsic  value." 

Sec.  80.  Jevons'  Political  Economy,  p.  159.  Mill's 
Principles  of  Political  Economy,  Book  3,  chap.  9,  sec.  3: 

"  Alterations  in  the  cost  of  production  of  the  precious  metals  do 
not  act  upon  the  value  of  money,  except  jnst  in  proportion  as  they 
increase  or  diminish  its  quantity;  which  cannot  be  said  of  any  other 
commodity.  It  would,  therefore,  I  conceive,  be  an  error,  both 
scietifically  and  practically,  to  discard  the  propositioa  which  asserts 
a  connection  between  the  value  of  money  and  its  quantity." 

Sec.  81.  Rogers'  Industrial  and  Commercial  History 
of  England,  p.  324: 

"  The  fundamental  cause  of  value  in  the  precious  metals  is  their 
use  as  money." 

Sec.  82.     Gide's  Political  Economy,  p.  216: 

"  Gold  and  silver  owe  almost  the  whole  of  their  value  to  the  fact 
that  they  can  be  converted  into  and  used  as  money.  If  gold  and 
silver  were  absolutely  excluded  from  the  currency  of  the  world,  their 
value  would  be  greatly  reduced,  if  it  did  not  almost  entirely  cease 
to  exist.  And  if  either  gold  or  silver  were  largely  excluded  from 
the  currency  of  the  world,  the  value  of  the  metal  so  excluded  would 
experience  a  very  great  fall." 

Sec.     83.     Gide's  Political  Economy,  p.  216: 

"  No  doubt  if  gold  and  silver  were  demonetized  in  every  country, 
metallic  money  would  lose  the  greatest  part  of  its  value.  We  must 
not  deceive  ourselves  as  to  this  matter;  and  the  present  fall  in  silver 
caused  by  its  demonetization  in  some  countries,  only  too  fully  proves 


VALUE  49 

this  fact.  Yet  many  authors  do  harbor  this  illusion,  or  at  any  rate 
do  not  put  their  readers  on  their  guard  against  it.  Most  of  them 
seem  to  say  that  the  Government  seal  stamped  on  gold  or  silver 
coin  merely  state  their  actual  value,  just  as  the  tickets  tradesmen 
put  on  their  goods.  But  the  declaration  that  the  six-gram  piece  is 
worth  twenty  francs  is  not  only  DECLARATORY,  but  it  is  also 
DETERMINATIVE  of  value.  It  is  because  the  will  of  the  legislator, 
or,  if  it  is  preferred,  the  agreement  of  men  has  chosen  gold  and 
silver  as  money,  that  these  metals  have  acquired  the  larger  part  of 
their  value;  and  they  would  lose  it  as  soon  as  this  agreement  or  this 
law  happens  to  cease  to  exist." 

Sec.  84.     Del  Mar's  Science  of  Money,  p.  67: 

"  If  it  be  asked,  what  is  the  precise  character  of  this  numerical 
relation  called  value?  the  reply  must  be  that  although  it  depends 
upon  many  uncertain  and  incalculable  elements,  as  human  necessity, 
desire,  passion,  speculation,  and  caprice,  yet,  as  shown  in  another 
part  of  this  work,  it  is  essentially  an  equitable  relation,  or  one  that 
between  equal  parties  has  a  tendency  to  become  equitable;  that  it  is 
extremely  variable;  that  it  is  extrinsic  to  and  not  connected  with 
the  physical  properties  of,  nor  difficulty  in  producing,  commodities; 
and  that  it  is  susceptible  of  precise  expression  in  numbers  and  in 
numbers  only." 

Sec.  85.     Graham's  Synonyms: 

"  Value  being  a  definite  relation,  cannot  with  propriety  be  coupled 
with  an  indefinite  article.  'A  value,'  for  example,  is  erroneous. 
Value  has  an  active,  worth  a  passive  meaning.  The  quality 
'worth'  is  what  a  thing  is  in  itself;  its  value  is  determined  by 
what  it  does  for  you.  Worth  is  'intrinsic,'  value  depends  upon 
circumstances." 

Sec.  86.     Walker's  Money,  Trade  and  Industry,  p.  60: 

"  Value  is  a  relation,  and,  therefore,  cannot  be  measured,  but 
only  expressed  or  stated.  Value  is,  in  the  very  nature  of  things, 
a  phenomenon  which  is  subject  to  incessant  change;  therefore  there 
can  be  no  standard  for  it.  So  palpable  is  this  objection  that  some 
writers  who  still  cling  to  the  term  Measure  of  Value  have 
abandoned  that  of  Standard  of  Value.  *  *  But,  in  fact,  neither 
term  is  correct." 


CHAPTER  VIII. 


VALUE  OF  THE  PRECIOUS  METALS. 

Sec.  87.  Del  Mar,  in  the  closing  paragraph  of  his 
"History  of  the  Precious  Metals"  (page  359)  deduces 
the  following  economic  principles: 

First—"  That  owing  to  the  great  influence  of  the  accumulated 
stock  on  hand  of  the  precious  metals,  and  the  fact  that  a  large 
portion  of  this  was  obtained  by  conquest  or  slavery,  and  therefore, 
at  the  time  it  entered  into  the  exchanges  it  cost  little  or  nothing, 
free  mining  has  always  been  and  for  a  long  time  yet  will  remain  on 
the  average  an  unprofitable  industry,  and  that  gold  and  silver  cost 
more  than  they  are  worth. 

Second — "  That  the  supply  of  gold  and  silver  is  not  like  that  of 
other,  and  particularly,  manufactured  commodities,  subject  to  the 
control  of  man,  but  is  dependent  on  the  vast  stock  on  hand  of  these 
-metals,  and  on  the  unforeseeable  issue  of  mining  discoveries  and 
explorations  from  time  to  time;  and  that  therefore,  gold  and  silver 
are  not  subject  in  the  same  unconditioned  manner  as  are  other 
commodities,  to  the  general  law  of  supply  and  demand. 

Third—"  That  the  value  of  gold  and  silver  is  not  determined  by 
the  cost  of  their  production,  but  by  the  quantity  in  existence,  or 
rather  by  the  total  quantity  of  these  metals  and  their  substitutes, 
(paper  promises,  and  symbols,  and  paper  and  metallic  numeraries) 
employed  as  money." 

Sec.  88.     F.  W.  Bain  of  Oxford,  England,  says: 

"  Cost  of  production  so  important  and  decisive  as  to  the  value  of 
commodities  bought  with  money,  is,  in  the  case  of  money  itself, 
of  no  account  whatever.  For,  any  particular  commodity  we 
can  do  without;  and  so  if  it  costs  too  much  to  produce  no  one  will 
buy  it,  but  money  must  be  had  at  all  costs,  for  without  it,  no 


VALUE  OF  THE  PRECIOUS  METALS  51 

commodities  can  be  procured  at  all.  And,  be  it  observed,  money  is 
comparatively  permanent.  It  is  not,  like  commodities  in  general, 
consumed  in  the  use.  Consequently  there  is  a  great  and  even 
enormous  difference  between  it  and  things  produced  to  be  consumed. 
It  is,  as  a  rule,  the  rapidly  perishing  commodity  whose  value 
depends  mainly  on  its  cost  of  production.  Each  time  it  is  wanted  it 
must  be  made  again.  But  money,  once  made,  is  there  for  almost 
any  length  of  time,  for  though  it  wastes  a  little,  yet  not  much,  its 
value  therefore  can  be  hardly,  if  at  all,  appreciably  dependent  on  its 
cost  of  production."    (See  Principle  of  Wealth  Creation,  p.  101.) 

Sec.89.     John  Stuart  Mill  says: 

"  Alterations  in  the  cost  of  production  of  the  precious  metals  do 
not  act  upon  the  value  of  money,  except  just  in  proportion  as  they 
increase  or  diminish  its  quantity,  which  cannot  be  said  of  any  other 
commodity."  (Principles  of  Political  Economy,  Book  3,  Chapter 
9,  Sec.  3.) 

Sec.  90.  Professor  Walker,  in  his  "  Money,  Trade 
and  Industry,"  (page  55),  quotes  approvingly  the  above 
paragraph  from  Mill,  and  then  says: 

"  How  will  the  action  of  money,  the  Value  Denominator,  or 
Common  Denominator,  in  exchange  be  affected  by  the  use  of  gold 
otherwise  than  as  money?  Not  at  all.  *  *  The  use  of 
gold  in  the  arts,  decorative  and  industrial,  has  nothing  to  do  with 
the  purchase  power  of  the  gold,  as  money.  On  the  contrary,  it  is 
the  purchase  power  of  gold  as  money,  which  primarily  determines 
how  much  gold  shall  be  consumed  in  the  arts." 

SEC.  91.  Mr.  Gibbs,  in  his  ''  Colloquy  on  Currency  " 
says: 

"  The  value  of  bullion  is  not  regulated  by  the  cost  of  production. 
In  this  it  differs  from  other  commodities." 

SEC.  92.  Del  Mar,  in  his  **  History  of  the  Precious 
Metals  "  (page  16)  says: 

"  Rising  from  the  obscure  details  of  the  early  history  of  the 
precious  metals,  it  may  not  be  amiss  before  opening  its  more  modern 
and  authentic  chapters  to  briefly  characterize  its  general  features. 
These  are  slavery  and  conquest;  slavery  being  the  means  by  which 


52  BIMETALLISM 

the  precious  metals  were  chiefly  first  acquired,  and  conquest  those 
by  which  their  possession  was  transferred  from  one  nation  to  another. 
Their  price  to  their  original  producers,  even  were  it  calculable, 
can  be  of  no  possible  interest  to  the  modern  world.  The  blood  and 
sweat  which  they  originally  cost  were  not  sacrificed  by  the  races  who 
now  possess  them;  but  by  others  long  since  extinct  and  forgotten. 
We  of  later  times  have  come  into  their  possession  by  violence. 
They  are  a  deeply  ensanguined  inheritance,  and  it  is  not  until  the 
millions  of  lives  which  this  violence  has  involved  can  be  reduced  to 
a  pecuniary  equivalent,  that  the  value  of  what  portion  of  the 
precious  metals  has  come  to  us  from  the  ancient  times  can  be 
reduced  to  a  basis  of  cost." 

Sec.  93.     He  also  says: 

"  The  relative  quantities  of  the  precious  metals  does  not  fix  the 
relative  value  of  the  metals,  nor  does  the  relative  cost  of  production 
fix  it.  What  does  fix  it?  Simply  the  law  of  the  nation  or  nations 
that  coin  the  greatest  quantity  of  them.  In  short,  the  conditions 
under  which  the  precious  metals  are  produced  have  nothing  what- 
ever to  do  with  their  relative  values  in  the  market.  This  results 
entirely  from  the  legal  ratio  at  which  they  are  being  coined,  and 
the  quantity  coined  under  the  legal  ratio."  (See  ''Money  and 
Civilization,"  page  104.) 

Sec.  94.  The  idea  that  the  value  of  the  precious 
metals,  or  that  their  relative  value  is  controlled,  or  even 
influenced  at  all,  when  coined  into  money,  by  the  cost  of 
production  is  fallacious.  Quantity  is  the  essential  ele- 
ment in  the  value  of  money,  without  any  regard  to  the 
fact  as  to  whether  the  material  out  of  which  it  is  made 
cost  much  or  little.  The  value  of  money  whether 
stamped  on  gold,  silver,  or  paper,  or  any  other  substance, 
depends  upon  its  quantity  as  compared  with  the  quantity 
of  commodities  to  be  exchanged  for  money;  and  the 
relative  value  of  gold  and  silver  bullion  depends  upon  the 
mint  price  paid  for  it  by  important  nations,  and  the  mint 
price  is  fixed  and  regulated  exclusively  by  law. 


CHAPTER  IX. 


INFLUENCE  OF  LAW  ON  VALUE. 

Sec.  95.  One  of  the  objections  urged  by  gold  mono- 
metallists  against  the  restoration  of  silver  to  free  coinage 
at  the  ratio  existing  prior  to  1873  is  that  silver  is  now 
worth  only  about  half  as  much  as  it  was  in  1873,  and  that 
to  coin  money  at  the  old  ratio  would  be  a  great  injustice 
to  creditors,  would,  in  fact,  amount  to  a  virtual  confisca- 
tion of  one-half  of  all  obligations  payable  in  money.  They 
also  insist  that  the  present  price  of  silver  is  its  normal 
price,  fixed  by  the  law  of  supply  and  demand,  and  that 
the  Government  should  not,  if  it  could,  and  could  not  if  it 
would,  double  the  value  of  silver  by  legislation;  that  law 
can  exert  no  influence  upon  value;  that  supply  and 
demand  must,  of  necessity,  regulate  and  control  value. 
They  object  to  the  restoration  of  silver  to  the  right  of 
coinage,  under  any  circumstances,  on  terms  of  equality 
with  gold  and  they  strenuously  insist  in  the  name  of 
"honest  money  "  and  the  "  inviolability  of  contracts," 
that  if  silver  is  restored  it  should  only  be  done  at  the  present 
commercial  value  of  silver  bullion,  that  is  to  say,  at  about 
the  ratio  of  32  to  1.  They  say  that  to  pay  a  debt  of  ^130 
at  the  present  time  it  would  require  200  ounces  of  silver 
bullion,  and  that  if  silver  were  restored  to  free  and  unlimited 
coinage  at  the  ratio  of  16  to  1  and  invested  with  the  full 
legal  tender  money  function,  this  obligation  could  be  paid 
with  the  money  coined  from  100  ounces  of  silver  bullion; 


M  BIMETALLISM 

this,  they  insist,  is  a  positive  injustice  to  the  creditor,  as 
he  would  be  compelled,  under  such  a  law,  to  receive  one- 
half  the  amount  he  had  a  right  to  expect  at  the  time  of 
the  execution  of  the  contract.  That  these  objections  are 
fallacious  can  very  easily  be  shown. 

Sec.  96.     The  objections  to  a  ratio  of  32  to  1  are: 

First — That  the  silver  dollar  is  now  large  enough  for  all 
practical  purposes.  To  double  its  size  would  be  to  encum- 
ber uselessly  the  pockets  of  those  who  would  have  to 
handle  and  use  this  money,  and  a  silver  dollar  double  the 
size  of  that  now  in  circulation  would  be  of  no  greater 
money  value  than  the  present  dollar,  and 

Second — Recoinage  at  the  ratio  of  32  to  1  would  entail 
a  positive  loss  to  the  nations,  or  to  the  people  of  the 
nations  recoining,  of  one-half  of  the  silver  money  they 
now  have.  There  is  in  the  world  about  ^4,000,000,000 
in  silver  money.  To  recoin  this  money  at  a  ratio  of  32  to 
1  would  reduce  the  volume  of  silver  money  one-half;  this 
would  amount  to  a  positive  and  sudden  contraction  of 
;^2, 000, 000, 000  in  the  world's  volume  of  money,  and 
would  produce  a  financial  crisis  such  as  the  world  has 
never  experienced  and  which  it  is  to  be  hoped  it  may 
never  be  afflicted  with. 

Sec.  97.  Would  the  creditor  be  injured  by  the  free 
coinage  of  silver?  Suppose  the  Government  should 
restore  to  silver  to  its  ancient  right  of  unlimited  legal  tender 
and  of  free  and  unlimited  coinage  at  the  ratio  of  16  to  1, 
and  that,  on  account  of  such  unlimited  coinage  and  legal 
tender  power,  the  price  of  silver  bullion  should  advance 
from  65  cents  per  ounce  to  $1.29  per  ounce.  Would  the 
creditor  be  injured?  I  fail  to  see  how  he  would  be  injured 
in  the  least.  While  it  is  true  that  at  present  it  would 
take  200  ounces  of  silver  bullion  to  pay  a  debt  of  $130, 
and  that  under  free  coinage  the  muney  coined  from  100 


INFLUENCE  OF  LAW  ON  VALUE  55 

ounces  would  pay  it,  yet  the  creditor  would  not  be  injured 
because  the  100  ounces  received  under  free  coinage  would 
ha\e  precisely  the  same  value  that  the  200  ounces  of 
silver  bullion  have  today.  It  is  true  that  if  paid  in  silver 
bullion  at  the  present  price  of  silver  bullion,  and  that  if  on 
the  adoption  of  a  free  coinage  law^at  the  old  ratio  silver 
should  double  in  value,  one-half  the  amount  of  silver 
bullion  would  then  satisfy  the  debt  but  the  value  received 
in  both  cases  would  be  the  same,  and  it  is  in  value  that 
the  creditor  is  to  be  paid  in  and  not  in  silver  bullion. 
Even  at  the  present  time,  unless  the  contract  is  payable 
specifically  in  gold  coin,  a  debt  of  ^130  can  be  paid  in 
silver  money  coined  from  100  ounces  of  the  silver  bullion 
precisely  as  it  might  be  under  a  free  coinage  law.  The 
only  difference  is  that,  under  a  free  coinage  law,  the 
debtor  owning  bullion  would  have  access  to  the  mint 
for  coinage  purposes,  while  at  present  he  has  no  power  to 
convert  his  bullion  into  money.  Is  it  not  perfectly  appar- 
ent that  there  is  no  force  in  this  objection  ? 

Sec.  98.  These  gentlemen  forget,  also,  or  ignore  the 
fact,  that  the  reason  why  silver  has  fallen  in  value  as 
measured  by  gold  is  because,  and  only  because,  it  has 
been,  by  law,  deprived  of  its  chief  use,  of  its  money  power, 
and  of  free  access  to  the  mint,  and  that  upon  its  restora- 
tion to  its  former  position  as  a  money  metal  at  the  old 
ratio  its  old  value  will  reassert  itself.  Mr.  Gibbs,  in  his 
**  Colloquy  on  Currency,"  page  32,  gives  a  very  happy 
and  forcible  illustration  of  this  fact.     He  says: 

*'  Supposing  a  decree  that  no  man  should  wear  a  hat;  people 
might  make  hats,  buy  and  sell  hats,  carry  them  in  their  hands,  sit 
on  them,  play  football  with  them,  hang  them  up  anywhere;  but  on 
no  accouut,  wear  them  on  their  heads.  Is  it  not  probable  that  the 
price  of  hats  would  fall?  The  Government  of  the  day  would  no 
doubt,  say  with  you,  Harrop,  that— 'The  then  existing  price  indi- 


56  BIMETALLISM 

cated  the  natural  value  of  a  hat;  that  they  had  not  interfered  with 
the  price,  that  they  had  left  that  to  the  natural  laws  of  supply  and 
demand.'  That  is  just  what  they  have  done  with  silver.  They 
have  cut  off  half  the  demand;  and  then  they  say  the  resulting  price 
is  a  true  indication  of  the  value  of  the  commodity.  Repeal  the 
*  Hat  Edict,'  and  you  would  find  that  the  neglected  stock  of  hats 
would  again  be  in  use  on  the  heads  of  the  lieges,  who  would  very 
cheerfully  pay  the  accustomed  price  for  them.  So  would  it  be  also 
with  silver— restore  its  use  as  full  money  and  you  would  see  that 
its  price  would  respond." 

Sec.  99.  The  advocates  of  a  gold  standard,  or  at  least 
that  portion  of  them  who  are  ready  to  deny  or  ignore 
well  established  monetary  principles  and  contradict  all 
the  historical  facts  relating  to  money  insist  that  law  can- 
not influence  value  and  that  the  coining  of  gold  and  silver 
bullion  into  money,  and  conferring  upon  such  coin  the 
legal  tender  money  function,  adds  nothing  to  its  value; 
that  the  stamp  of  the  government  is  merely  a  certificate 
of  the  weight  and  fineness  of  the  metal,  and  that  bullion 
in  bars  has,  and  must  necessarily  have,  the  same  value  as 
the  same  amount  of  bullion  in  coined  money;  and  these 
**  gentlemen  "  apply  to  anyone  who  differs  with  them  on 
this  proposition  such  pet  names  as  *Munatic,"  **  faddist," 
etc.,  etc.  (See  writings  of  Wells,  Giffen,  Atkinson, 
Laughlin,  and  other  pseudo  economists  of  this  school. 

Sec.  100.  Let  us  examine  this  question.  Professor 
Walker,  in  his  work  on  **  International  Bimetallism" 
(page  94)  says: 

"  There  is  not  a  civilized  country  in  the  world  at  present  where 
the  law  is  not  profoundly  affecting,  if  not  controlling,  the  value  of 
some  commodity.  Laws  often  affect  values  when  they  were  not 
intended  to  do  so.  Indeed,  it  is  often  difficult  to  prevent  laws  from 
affecting  values  when  they  are  passed  for  a  very  different  purpose, 
even  when  the  result  of  affecting  values  has  been  carefully  sought 
to  be  avoided.  Whenever  the  law  sets  an  economic  force  in  motion 
it  can  and  will  and  must  affect  value.    The  degree  in  which  value 


INFLUENCE  OF  LAW  ON  VALUE  57 

shall  be  affected  will  depend  upon  the  extent  of  the  economic  force 
thus  put  into  operation.  Law  cannot  create  value,  that  is,  add  to 
the  sum  of  wealth,  but  to  say  it  cannot  affect  value,  that  is,  change 
the  relative  value  of  things,  is  preposterous. 

"As  regards  Bimetallism,  then,  the  question  simply  is,  can 
government  set  in  motion  any  economic  force  which  will  affect  the 
relative  value  of  gold  and  silver?  I  answer,  yes,  incontestably; 
and  that  force  is  one  of  enormous  scope  and  reach.  By  declaring 
the  two  metals  indifferently  legal  tender  in  the  payment  of  debts,  at 
a  certain  ratio,  it  at  once  and  powerfully  influences  the  demand  for 
one  and  the  other  of  the  two  metals.  This  was  what  France  did  by 
the  law  of  1803.  That  law  gave  an  ounce  of  gold,  in  coined  money, 
precisely  the  same  power  to  pay  debts  as  that  possessed  by  lSj4 
ounces  of  silver,  in  coined  money.  The  operation  of  this  principle 
was  simple,  instantaneous,  automatic.  If,  at  any  time,  either  of  the 
two  metals  became  less  valuable  than  by  the  legal  ratio,  every 
debtor  instanctively  sought  coin  of  that  metal,  with  which  to  meet 
his  obligations  in  preference  to  coin  of  the  other  metal.  This 
increased  the  demad  for  the  cheaper  metal ;  and,  by  that  very  act, 
decreased  the  demand  for  the  metal  which  was  becoming  dearer  in 
the  market.  Now,  to  increase  demand  is,  other  things  equal,  to 
raise  price;  while  to  decrease  demand  is,  other  things  equal,  to  lower 
price.  Thus,  through  its  power  to  regulate  the  payment  of  indebted- 
ness, the  government  practically  threw  its  weight  upon  that  one  of 
the  two  metals  which  tended  to  rise  and  keep  it  down.  No  one 
wanted  the  dearer  metal  to  pay  debts  with;  everyone  wanted  the 
cheaper  metal  for  that  purpose;  and  since  the  volume  of  indebted- 
ness coming  due  every  day  in  any  commercial  country  is  very  large, 
the  force  thus  invoked  was  sufficient  to  produce  an  enormous 
economic  effect.  It  was  not  at  all  because  the  French  Government 
declared  that  one  part  of  gold  should  be  worth  15)4  parts  of  silver 
that  this  result  took  place;  but  because  the  French  Government  set 
in  motion  competent  economic  forces  to  that  end. 

"  Chevalier,  in  his  day  the  leading  monometallist  of  France;  the 
monometallist  Lexis,  the  first  economic  statistician  of  Germany,  if 
not  of  the  world;  the  monometallists  Cairnes,  Jevons,  Bagehot, 
the  three  greatest  economists  of  England  who  survived  John  Stuart 
Mill;  and  Sir  Robert  Giffen  and  Lord  Farrer,  today  the  chief 
champions  of  monometallism;  every  one  of  the  men  quoted,  and  I 
might  add  a  score  of  eminent  names,  has  fully  and  ungrudgingly 


58  BIMETALLISM 

conceded  the  principles  stated.  The  concurrence  of  general  opinion 
on  this  subject  is  overwhelming.  Not  a  person  worth  quoting  can 
be  cited  to  the  contrary  effect."  (See  Walker's  "  International 
Bimetallism,"  page  96.) 

Sec.  101.  A  bimetallic  law  does  not  attempt  to  fix  the 
price  or  relative  value  of  the  two  metals;  it  only  fixes  a 
ratio  at  which  they  will  be  coined  into  money,  and  invest 
the  money  coined  from  either  of  the  metals  with  the  legal 
tender  function,  and  when  the  ratio  is  thus  fixed,  the  law 
of  demand  will  fix  the  price.  The  debtor,  having  the 
option  to  discharge  his  obligations  in  money  coined  from 
either,  will  as  a  matter  of  self-interest  select  the  metal 
which  can  be  obtained  the  cheapest  and  the  extra  demand 
thus  created  will  soon  counteract  any  decline  in  relative 
value,  and  it  would  be  impossible  for  any  great  divergence 
between  them.  Chevalier,  writing  in  1860  on  the  French 
ratio  of  15^  to  1  said:  "  While  this  state  of  things  lasts, 
(that  is  unlimited  coinage,  at  the  ratio  of  IS}^  to  1)  it 
will  be  impossible  at  London,  Brussels,  or  Hamburg,  or 
even  at  New  York,  or  at  any  other  great  center  of  com- 
merce, for  the  value  of  gold  to  fall  much  below  15^  times 
its  weight  in  silver." 

Sec.  102.  Count  Rusconi,  delegate  from  Italy  to  the 
International  Monetary  Conference  held  in  Paris  in  1878, 
in  a  speech  delivered  before  the  conference,  and  reported 
in  the  proceedings  of  the  conference,  pages  61-62,  said 
that  he  did  not  believe,  for  his  part,  that  the  establish- 
ment of  a  ratio  between  gold  and  silver  was  like  squaring 
the  circle. 

*'  A  metal  is  one  thing,"  said  he,  "  but  Money  is  another.  Nature 
makes  the  metal.  Law  alone  makes  the  Money.  If  the  uncoined 
metal  is  subjected,  as  merchandise,  to  all  the  accidents  of  supply 
and  demand,  all  the  variations  of  the  market,  the  coined  metal  being 
no  longer  a  merchandise,  but  having  legal  tender  power,  has  a 
price  which  does  not  vary.    In  a  peice  of  metal,  coined  according  to 


INFLUENCE  OF  LAW  ON  VALUE  59 

certain  rules  as  to  alloy,  impression,  size,  shape,  weight,  the  law 
becomes  in  a  manner  INCARNATE.  It  gives  it  the  power  of  paying 
obligations,  a  virtue,  a  price,  which  the  metal-merchandise  could 
not  obtain.  It  is  not  wrong  to  say  that  silver  rises  and  falls  in  the 
market.  In  the  territory  of  the  States,  however,  where  the  law 
reigns  and  governs,  the  value  of  the  Coin  does  not  change.  Our 
countrymen  would  be  greatly  astonished  if  they  were  to  be  told  that 
the  5-franc  piece  which  they  laid  by  in  1873,  which  they  put  into  a 
savings  bank,  or  kept  in  their  chests,  has  in  the  last  five  years 
performed  all  the  somersaults  outlined  in  the  very  instructive  table 
which  the  Director  of  the  Administration  of  Coins  and  Medals  of 
Paris  has  kindly  communicated  to  the  Conference.  The  metal 
changes  in  value  it  is  true;  but  as  long  as  the  State  maintains  itself 
the  Coin  does  not  change;  it  has  actually  and  effectively  the  value 
which  is  indicated  by  its  imprint." 

Sec  103.  That  legislation  can  and  does  influence 
value  by  increasing  or  diminishing  the  demand  for  a 
thing  is  an  economic  principle  so  well  established  that  no 
well-informed  man  who  has  any  regard  for  truth  or  con- 
sistency, will  question  it.  The  history  of  the  silver 
legislation  in  this  country  fully  attests  this  fact.  When 
the  Bland-Allison  Act  was  passed  in  1878,  it  created  a 
demand  for  silver  which  did  not  exist  prior  to  its  passage; 
and  by  reason  of  this  increased  demand,  caused  solely  by 
legislation,  the  price  of  silver  rapidly  advanced  in  all  the 
markets  of  the  world.  Again  in  1890,  when  the  Sherman 
Act  was  adopted  which  increased  the  demand  for  silver 
from  ;$2,000,000  worth  of  bullion  per  month  to  4,500,000 
ounces  per  month,  silver  bullion  rose  in  value  in  a  few 
days  from  94  cents  per  ounce  to  $1.20  per  ounce,  not  only 
in  the  United  States  but  also  in  Europe.  When  the  India 
mint,  in  1893,  was  closed  to  the  free  coinage  of  silver, 
silver  fell  almost  as  much  in  value  in  five  days.  In  view 
of  all  these  facts,  can  there  be  any  doubt  that  legislation 
did,  in  the  instances  named,  affect  the  value  of  silver 
bullion.? 


CHAPTER  X. 


BIMETALLISM 

Sec.  104.  Bimetallism  is  defined  by  Webster  to  be 
**  The  legalized  use  of  two  metals  (as  gold  and  silver)  in 
the  currency  of  a  country  at  a  fixed  relative  value." 

Sec.  105.  The  difficulty  with  many  of  the  advocates 
of  the  gold  standard  is  that  they  do  not  know  what 
bimetallism  is.  They  do  not  distinguish  between  money 
and  a  piece  of  metal;  they  think  that  gold  is  money  and 
that  the  stamp  of  the  Government  upon  a  gold  or  silver 
coin  is  simply  a  certificate  of  the  weight  and  fineness  of 
the  metal,  and  that  neither  the  stamp  nor  the  law  author- 
izing its  use  and  conferring  upon  the  coin  the  money 
function  adds  anything  to  the  value  of  the  coin,  and  that 
its  value  depends  exclusively  on  the  value  of  the  metal 
contained  in  the  coin. 

Sec.  106.  This  is  the  position  taken  by  the  gold 
standard  advocates.  From  such  premises  is  devolved  the 
melting-pot  fallacy  which  was  so  persistently  urged 
during  the  campaign  of  1896.  The  gold  standard  advo- 
cates insisted  that  the  test  of  "good  money,"  ''sound 
money,"  "honest  money,"  is  the  melting-pot.  They 
said:  "  Put  ;^100  in  gold  coin  in  the  melting-pot  and  when 
melted  the  gold  is  still  worth  $100;  but  put  $100  of  silver 
coin  into  the  melting-pot  and  when  melted  it  is  worth  but 
$50.     Hence  gold  is  the  only  good  money." 


BIMETALLISM  61 

Sec.  107.  Mr.  Boissevain,  a  member  of  the  Statistical 
Institute  of  the  Netherlands,  published  a  pamphlet  of 
about  100  pages  entitled  "  The  Monetary  Situation," 
which  has  been  translated  into  the  English  language  and 
extensively  circulated  in  the  United  States  by  the  gold 
standard  advocates  as  an  able  exposition  of  the  Science  of 
Money.     In  this  pamphlet  Mr.  Boissevain  says: 

"  The  right  to  coin  money  belongs  to  the  government;  but  its 
object  is  no  other  than  to  insure  the  uniformity  in  the  coins  and 
their  equal  weight  of  fine  metal.  It  is  with  the  legislature  whose 
object  is  to  prevent  uncertainty  in  the  interpretation  ot  contracts 
—that  rests  the  power  to  decide  what  metal  shall  be  used  for 
the  coinage,  what  money  shall  be  legal  tender.  It  is,  however, 
not  the  fact  of  HAVING  BEEN  COINED  THAT  GIVES  ITS  VALUE 
TO  THE  METAL  USED  AS  LEGAL  TENDER,  BUT  THE  COINS  OWE 
THEIR  VALUE  ONLY  TO  THAT  OF  THE  METAL  ITSELF." 

Sec  108.  It  is  difficult  to  understand  how  any  man  of 
ordinary  intelligence — much  less  a  man  who  professes  to 
know  something  about  the  Science  of  Money — can  say 
"  coins  owe  their  value  only  to  that  of  the  metal  itself." 
There  is  not  a  banker  or  business  man  in  the  United 
States  who  does  not  know  that  the  silver  dollar  in  circu- 
lation in  this  country  gets  its  value,  as  money,  from  the 
law  and  the  impression  it  has  received  at  the  mint,  and 
not  from  the  metal  it  contains;  and  that  would  not  refuse 
to  receive  it  if  the  stamp  was  defaced  or  the  law  confer- 
ring on  it  the  money  function  should  be  repealed;  who 
does  not  know  that  the  value  of  the  metal  contained  in 
the  coin  is  less  than  one-half  of  the  value  of  the  coin,  and 
yet  the  gold  standard  advocates  do  not  hesitate,  at  least 
many  of  them  do  not  hesitate,  to  give  publicity  to  such 
misleading  and  unwarranted  statements  as  those  promul- 
gated by  Mr.  Boissevain. 

Sec  109.  Mr.  Boissevain  lives  in  the  Netherlands. 
The  last  official  report  shows  that  the  coin  money  in  use 


62  BIMETALLISM 

at  that  time  in  the  Netherlands  consisted  of  ^21,900,000 
in  gold  (florins)  and  ;^52,700,000  in  full  legal  tender 
silver  (florins)  coined  at  the  ratio  of  15)^  to  1,  and 
$3,400,000  in  limited  tender  silver  money  coined  at  the 
ratio  of  15  to  1.  The  full  tender  silver  florins  were  at 
the  date  of  that  report  and  are  today  discharging  the 
money  function  in  the  Netherlands  at  their  face  value,  to 
all  intents  and  purposes,  as  fully  and  completely  as  the  gold 
florins,  although  the  value  of  the  metal  they  contain  is  less 
than  one-half  as  much,  florin  for  florin,  as  the  value  of  the 
metal  contained  in  the  gold  coin.  If  coin  money  "owes 
its  value  only  to  that  of  the  metal  itself,"  will  Mr. 
Boissevain  explain  why  it  is  that  the  silver  florin  readily 
passes  as  money  for  twice  the  value  of  the  metal  con- 
tained in  the  coin? 

Sec.  110.  Mr.  Boissevain  lives  almost  within  stone's 
throw  of  France,  and  must  know  that  in  France  there  is 
in  actual  use  as  full  legal  tender  money  abeut  $400,000,- 
000  in  silver  francs,  every  franc  of  which  is  discharging 
the  money  function  at  its  nominal  or  face  value  at  par 
with  gold,  although  the  metal  value  of  the  silver  franc  is 
less  than  one-half  as  much  as  the  metal  value  of  the  gold 
franc. 

Sec.  111.  Mr.  Boissevain  must  know  that  in  Europe 
there  is  at  the  present  time  nearly  $700,000,000  in  full 
legal  tender  silver  money  in  circulation  amongst  the 
people,  coined  at  the  rate  of  about  li}4  to  1,  and  more 
than  $500,000,000  subsidiary  silver  money  coined  at  a 
ratio  of  about  14  or  14j^  to  1,  and  that  this  silver  money 
is  discharging  the  money  function  at  its  nominal  value, 
equally  as  well  as  the  gold  money  circulating  side  by 
side  with  it,  while  its  commodity  or  metallic  value  is  less 
than  one-half  that  of  the  gold;  and  yet  he  says,  **The 
coins  owe  their  value  only  to  that  of  the  metal  itself." 


BIMETALLISM  63 

Sec.  112.  Mr.  Boissevain,  being  a  member  of  the 
Statistical  Institute  of  the  Netherlands,  may  be  a  very 
good  statistician;  but  from  a  perusal  of  his  pamphlet  it 
becomes  evident  that  he  is  profoundly  ignorant  of  the 
most  elementary  principles  of  monetary  science;  that  he 
does  not  even  know  what  money  is;  that  he  is  not  able 
to  distinguish  between  money  and  a  piece  of  metal;  that 
his  knowledge  of  political  economy  has  been  acquired, 
not  by  studying  the  masters,  but  by  inspiration,  and 
that  he  has  been  imposed  upon  by  false  prophets.  He 
is,  however,  entitled  to  a  seat  on  the  same  shelf  with 
Wells,  Atkinson,  Laughlin  and  Giffen. 

Sec.  113.  Suppose  I  have  a  silver  disc  weighing  412  j4 
grains,  nine-tenths  fme,  precisely  such  silver  as  the 
Government  uses  in  coining  silver  dollars.  I  go  out  on 
the  streets  of  a  large  city  and  try  to  sell  it.  How  many 
men  can  I  find  that  will  buy  it?  Probably  there  are  not 
ten  men  in  the  city  that  want  it.  As  a  commodity  it  has 
but  one  use,  it  will  answer  but  one  purpose.  If  I  find  a 
man  that  wants  it,  then  there  is  a  haggling  as  to  the 
price.  I  want  fifty  cents  for  it,  and  he  offers  forty  cents 
only;  we  finally  compromise,  and  I  sell  it  for  forty-five 
cents.  Now  I  have  another  silver  disc  of  precisely  the 
same  size,  weight  and  quality  of  silver,  but  this  one  has 
passed  through  the  mint,  it  has  the  stamp  of  the  Govern- 
ment impressed  upon  it;  it  has  been  invested  with  the 
money  function.  Who  wants  this  silver  disc?  Every 
man,  woman  and  child  in  the  city  wants  it.  Is  there  any 
haggling  about  the  price?  Not  at  all.  It  is  worth  100 
cents.  And  every  man,  woman  and  child  in  the  city 
will  gladly  take  it  at  that  price  and  pay  for  it  with  com- 
modities or  services.  Is  it  not  perfectly  apparent  that 
this  silver  disc  does  not  get  its  value  from  the  value  of 
the  metal  it  contains,  but  from  the  fact  that  it  has  been 


64  BIMETALLISM 

invested  with  the  money  function?  As  a  commodity  it 
would  answer  but  one  purpose;  as  money  it  commands 
all  things. 

Sec.  114.  The  melting-pot  theory  as  a  test  for  money 
is  what  Terrence  O' Brian,  in  the  play  of  Peter  Simple, 
calls  ** flapdoodle,"  "the  stuff  they  feed  fools  on." 

Sec.  115.  The  theory  of  the  ordinary  gold  standard 
advocate  is  that  in  order  to  maintain  bimetallism,  both 
metals  must  be  in  circulation  in  equal  volume  at  the  same 
time,  and  at  all  times,  and  that  the  Government  must  at 
all  times  be  prepared,  able  and  willing  to  exchange  gold 
for  silver,  or  silver  for  gold,  upon  the  request  or  demand 
of  any  citizen,  or  upon  the  request  or  demand  of  any  Gov- 
enment,  and  that  whenever  the  money  coined  from  one  of 
the  metals  is  largely  in  excess  of  that  coined  from  the  other, 
or  whenever  one  of  the  metals  commands  a  premium  over 
the  other,  or  whenever  the  Government  refuses  to  redeem 
the  coins  of  one  of  the  metals  in  the  coins  of  the  other, 
then  bimetallism  is  overthrown.  Entertaining  these  views, 
they  insist  that  bimetallism  did  not,  in  fact,  exist  in  the 
United  States  between  1792  and  1834,  but  silver  mono- 
metallism, because  most  of  the  metal  money  in  use  in 
this  country  during  that  time,  was  silver;  and  that  since 
1834  the  United  States  has  been  upon  a  gold  basis 
because  since  1834  our  metallic  money  has  been  mostly 
gold.  They  also  claim  that  since  1803,  France  has  been 
for  a  part  of  the  time  on  a  silver  basis  and  for  a  part  of 
the  time  on  a  gold  basis,  because  at  some  times  there  was 
more  silver,  and  sometimes  more  gold  in  circulation  in 
France.  Men  entertaining  such  views  ought  to  consult  a 
dictionary  for  a  definition  of  bimetallism. 

Sec.  116.  Bimetallism  does  not  consist  in  the  actual 
use  of  two  metals  conjointly,  but  in  the  right,  under  the 
law,  so  to  use  either  of  them  at  the  option  of  the  debtor 


BIMETALLISM  65 

at  a  certain  fixed  ratio  in  the  payment  of  debt.  If  one  of 
the  metals  happens  to  be  scarce  and  hard  to  obtain,  and 
the  other  is  abundant,  or  if  one  of  the  metals  commands  a 
premium  in  the  other,  the  debtor  would  not  be  likely  to 
spend  much  time  in  looking  for  the  scarcer  and  dearer 
metal  with  which  to  liquidate  his  obligations,  but  would 
make  use  of  that  which  was  more  abundant  and  cheaper; 
and  so  long  as  the  bimetallic  law  remained  in  force  it 
would  make  no  difference  to  him  whether  gold  or  silver 
was  most  abundant,  or  whether  none  of  one  of  the  metals 
was  in  circulation.  Even  though  one  of  the  metals  should 
entirely  disappear  from  the  country,  bimetallism  would 
remain  a  fixed  fact  as  long  as  both  metals  had  access  to 
the  mint  on  equal  terms,  at  a  fixed  ratio,  and  the  coins 
fabricated  from  each  of  the  metals  were  equally  invested 
with  the  money  function,  and  the  option  was  with  the 
debtor  to  use  either  of  them  in  payment  of  debt. 
Neither  is  it  necessary  in  order  to  maintain  bimetallism, 
in  any  country  that  the  government,  at  the  demand  of  any 
person  or  of  any  government,  should  exchange  one  of  the 
metals  for  the  other.  If  both  metals  when  coined  into 
money  at  a  certain  ratio  have  equal  debt-paying  power, 
if  both  are  equally  invested  with  the  money  function  for 
all  purposes,  they  will  be  equally  valuable  as  money  in 
such  country  when  so  coined;  if  either  should  depreciate 
in  monometallic  countries,  and  such  countries  desire  to 
obtain  the  dearer  metal,  the  metal  of  their  choice,  the 
burden  rests  on  such  countries,  and  not  on  the  bimetallic 
country,  to  pay  the  premium  created  by  their  short- 
sighted policy. 

Sec.  117.  It  is  not  contended  that,  under  a  bimetallic 
law,  gold  and  silver  bullion  will  always  remain  at  exactly 
the  same  relative  value  all  over  the  world.  Sometimes 
the  bullion  of  one  of  the  metals  might  command  a  slight 


66  BIMETALLISM 

premium  in  the  other,  even  in  bimetallic  countries. 
In  bimetallic  countries  a  slight  premium  might  result 
from  scarcity  of  either  of  the  metals,  from  sudden  and 
extraordinary  demand  for  one  or  the  other  of  the  metals 
for  use  in  the  arts  or  manufactures,  or  from  demand  for 
export,  but  the  premium  in  bimetallic  countries  would 
necessarily  be  slight,  as  any  considerable  premium  would 
cause  the  coin  of  the  metal  for  which  a  premium  was 
offered  to  be  melted.  The  premium  could  scarcely  exceed 
the  mint  charge  for  fabrication  and  the  cost  of  collecting 
the  coins.  In  monometallic  countries  the  premium  might 
become  considerably  greater,  because  in  addition  to  mint 
charges,  cost  of  transportation  from  such  countries  to 
bimetallic  countries,  insurance,  commissions,  interest  on 
money  invested,  etc.,  would  have  to  be  added.  There 
might  and  probably  would  be  fluctuations  in  the  value  of 
gold  and  silver  bullion  as  above  indicated. 

Sec.  118.  When  we  consider  the  effect  of  the  French 
law  of  1803  on  the  relative  value  of  gold  and  silver  bullion, 
and  see  that  the  fluctuation  in  their  relative  value  in  France 
from  the  legal  ratio  of  15^  to  1  never  exceeded  but  very 
slightly  in  amount  the  discrepancy  in  mint  charges,  and 
that  even  in  other  countries  the  fluctuation  in  their  value 
never  exceeded  the  mint  charges,  plus  cost  of  transporta- 
tion, insurance,  commission,  interest  and  other  incidental 
charges,  and  that  the  relative  value  of  the  coined  money 
never  fluctuated  at  all  for  three-quarters  of  a  century,  or 
so  long  as  the  mint  was  kept  open,  it  amounts  to  a 
demonstration  that  any  first-class  nation  can,  with  a 
bimetallic  law  faithfully  executed,  hold  even  the  relative 
value  of  gold  and  silver  bullion  comparatively  steady. 

Sec.  119.  While  it  is  admitted  by  bimetallists  that 
there  may  be  a  slight  fluctuation  from  the  legal  ratio  in 
the  value  of  gold  and  silver  bullion,  arising  from  local 


BIMETALLISM  67 

influences,  they  contend  that  there  will  not  and  cannot  be 
any  fluctuation  in  the  value  of  the  money,  as  money,  coined 
from  such  bullion,  or  at  least  the  value  of  the  money 
coined  from  either  of  the  metals,  cannot  fall  below  the 
mint  ratio.  They  contend  that  it  stands  to  reason  that 
when  a  dollar  coined  from  one  metal  is  invested  with  all 
the  functions  possessed  by  a  dollar  coined  from  the  other 
metal,  when  it  will  pay  as  much  debt  or  buy  as  much 
commodity  as  the  other,  it  will  be  just  as  valuable  as 
money  as  the  other,  and  that  no  man  will  pay  more  for 
one  than  for  the  other.  If  a  person  desires  the  gold  or 
the  silver  in  the  coin  for  other  than  monetary  purposes, 
he  may  pay  a  slight  premium  to  obtain  it,  but  no  man 
will  dispose  of  either  for  less  than  its  money  value,  for  he 
can  always  obtain  that  at  the  mint.  So,  while  it  might 
be  possible  that  either  of  the  metals,  or  coins  of  either  of 
the  metals,  might  command  a  slight  premium,  it  would  be 
impossible  for  coins  of  either  to  fall  below  their  money,  or 
face  value.  If  a  person  desired  to  withdraw  money  from 
circulation  for  the  purpose  of  hoarding  and  he  believed 
there  was  more  probability  of  silver  depreciating  in  value 
than  there  was  of  gold,  he  would  hoard  gold.  If  he 
believed  there  was  a  greater  probability  of  gold  depreciat- 
ing, he  would  hoard  silver.  If,  however,  he  desired  to 
use  it  as  money,  and  the  coins  of  both  metals  had  equal 
monetary  power,  it  would  make  no  difference  to  him 
whether  he  received  gold  or  silver.  All  this  talk  about 
there  being  a  general  preference  among  the  people  for 
gold  money  is  the  veriest  nonsense.  In  ninety-nine  cases 
out  of  one  hundred  when  a  man  receives  money  he 
receives  it  because  it  is  money  and  not  because  it  is  gold 
or  because  it  is  silver.  Not  once  in  one  hundred  does  he 
think  of  it  as  gold  or  silver;  all  he  cares  to  know  is  that 
when  he  desires  to  part  with  it  others  will  receive  it  from 


68  BIMETALLISM 

him  at  the  same  valuation  that  he  received  it.  If  he 
wanted  money  for  small  transactions  he  would  probably 
prefer  silver,  and  subsidiary  silver  at  that,  which  usually 
kas  less  commodity  value  than  full  tender  silver  coins.  If 
he  wanted  to  carry  with  him  a  somewhat  larger  sum  he 
would  probably  prefer  gold.  If  he  desired  to  carry  on  his 
person  a  still  larger  sum  he  would  in  all  probability  prefer 
paper  money,  but  in  none  of  these  cases  would  any 
thought  of  the  commodity  value  of  the  money  enter  his 
head,  he  would  be  consulting  only  his  own  convenience. 

Sec.  120.  During  the  time  the  bimetallic  law  of  France 
held  the  metals  comparatively  steady  at  the  legal  ratio  of 
15^  to  1,  the  production  of  the  precious  metals  was  as 
follows: 

From  1803  to  1820,  value  of  silver  four  times  that  of 
gold;  from  1821  to  1840,  value  of  silver  two  times  that  of 
gold;  from  1841  to  1860,  value  of  gold  two  and  a  half 
times  that  of  silver;  and  yet  the  metals  held  together 
with  but  slight  fluctuation  from  the  French  ratio  of  I5j^ 
to  1,  notwithstanding  the  enormous  fluctuation  in  the 
quantity  of  the  metals  produced! 

Sec.  121.  Free  coinage  means  that  any  person  may 
present  bullion  at  the  mint  and  have  it  coined  into  money. 
Gratuitous  coinage  means  that  the  bullion  so  presented  at 
the  mint  will  be  coined  into  money  and  the  same  weight 
of  fine  metal  in  coined  money  will  be  returned  to  the 
person  so  presenting  the  bullion  without  any  charge  for 
fabricating  the  coin.  Where  bullion  is  received  without 
limit  from  any  person  who  may  present  it,  and  coined 
into  money  and  returned  to  him  in  coin,  the  coinage-  is 
said  to  be  free  and  unlimited  although  a  seigniorage  may 
be  exacted  for  fabricating  the  coin.  The  word  free  as 
applied  to  coinage  has  reference  to  the  right  of  access  to 
the  mint  for  coinage  purposes,  and  no  reference  whatever 


BIMETALLISM  69 

to  seigniorage  or  mint  charges.  In  order  to  place  both 
metals  upon  an  exact  equality,  the  seigniorage  or  mint 
charge,  if  any  is  made,  should  be  an  ad  valorem  charge, 
the  same  charge  being  made  for  the  same  value  of  each 
metal. 

Sec.  122.  M.  Rowland,  Governor  of  the  Bank  of 
France,  in  discussing  bimetallism,  said  : 

"  We  have  not  to  do  with  idle  theories.  The  two  moneys  have 
actually  co-existed  since  the  origin  of  human  society.  They  co- 
exist because  the  two  together  are  necessary,  by  their  quantity  to 
meet  the  needs  of  circulation.  This  necessity  of  the  two  metals, 
has  it  ceased  to  exist?  Is  it  established  that  the  quantity  of  actual 
and  prospective  gold  is  such  that  we  can  now  renounce  the  use  of 
silver  without  disaster? " 

Sec.  123.  At  a  session  (October  30th,  1873),  of  the 
Belgian  Monetary  Commission,  Professor  M.  de  Laveleye 
said : 

"  Debtors,  and  among  them  the  States,  have  the  right  to  pay  in 
gold  or  silver,  and  this  right  cannot  be  taken  away  without  disturb- 
ing the  relation  of  debtors  and  creditors,  to  the  prejudice  of  debtors 
to  the  extent  of  perhaps  one-half,  certainly  of  one-third.  To  increase 
all  debts  by  a  blow,  is  a  measure  so  violent,  so  revolutionary,  that 
I  cannot  believe  that  the  government  will  propose  it,  or  that  the 
Chamber  will  vote  it." 

Sec.  124.  The  U.  S.  Monetary  Commission  of  1876 
in  their  report,  page  10,  says: 

"  The  philosophy  of  the  double  standard  is  that  a  rise  in  the 
value  of  money  and  a  fall  in  general  prices  are  the  greatest  evils 
which  can  befall  the  world,  and  its  object  is  to  prevent,  as  far  as 
possible,  the  occurrence  of  these  evils.  It  takes  no  precaution 
against  a  fall  in  the  value  of  money,  because  in  the  whole  history 
of  the  human  race  not  a  single  instance  can  be  pointed  out  of  a  fall 
in  the  value  of  either  or  of  both  of  the  metals  which  has  not  proved 
a  benefaction  to  mankind;  while  on  the  other  hand,  during  every 
period,  and  whenever  a  rise  in  the  value  of  metallic  money  has 
occurred,  it  has  been  attended  by  financial,  industrial,  political,  and 


70  BIMETALLISM 

social  disaster.  An  increasing  value  of  money  and  falling  prices 
have  been  and  are  more  fruitful  of  human  misery  than  war, 
pestilence,  or  famine.  They  have  wrought  more  injustice  than  all 
the  bad  laws  which  were  ever  enacted.  Under  the  double  standard 
these  evils  could  never  occur,  except  by  a  rise  in  the  value  of  both 
metals,  while  under  the  single  standard  they  might  be  caused  by  a 
rise  in  the  value  of  one  of  them." 

Sec.  125.  The  phrase  ''Double  Standard"  does  not 
mean  two  standards  but  one  standard  based  upon  two 
metals.  Under  a  proper  bimetallic  law,  where  both 
metals  have  the  same  mint  privileges,  value  for  value, 
and  coins  from  both  of  them  are  equally  invested  with 
the  money  function  for  all  purposes  when  coined  at  the 
established  ratio,  they  would  be  of  equal  value,  and  a 
dollar  coined  from  silver  and  one  coined  from  gold  would 
no  more  constitute  a  double  standard  than  two  gold 
dollars  or  two  silver  dollars  would  constitute  a  double 
standard.  Mr.  Helm  is  unquestionably  right  in  rejecting 
the  phrase  *' Double  Standard  "  as  unmeaning  and  mis- 
leading and  using  the  phrase  ** Joint  Standard"  in  lieu 
thereof. 

Sec.  126.  Bimetallism  does  not  necessarily  mean  an 
expansion  of  the  volume  of  money.  It  is  not  at  all 
probable  that  the  total  annual  production  of  the  precious 
metals,  if  not  an  ounce  of  either  was  consumed  for  other  than 
monetary  piyposes,  (and  the  amount  being  consumed  in 
the  arts,  manufactures  and  for  export  to  the  Orient, 
equals  three-fourths  of  the  annual  output),  would  more 
than  keep  pace  with  the  increasing  demand  for  money. 
The  most  that  can  reasonably  be  expected  from  it  would 
be  that  it  might  check  a  further  fall  of  prices.  But  if  it 
should  increase  prices,  if  it  should  even,  eventually, 
restore  the  prices  prevailing  in  1873,  who  would  be 
injured  ?      M.  Chevalier,  in  his  book  written  in  1857  on 


BIMETALLISM  71 

the  **  Probable  Fall  in  the  Value  of  Gold,"  pp.  125-126, 
says: 

"  It  follows,  therefore,  that  if  we  would  particularize  the  persons 
who  will  be  more  or  less  deeply  affected  by  a  fall  in  gold,  we  have 
only  to  select  those  whose  income,  expressed  in  monetary  units, 
(the  pound  sterling  in  England,  and  the  franc  in  France)  will  not 
find  itself  augmented,  naturally  and  by  self-adjusting  process,  in 
exact  proportion  to  the  fall  in  gold. 

"  All  those  persons  whose  income  expressed  in  monetary  units 
remains  the  same,  would  be  injured  by  a  change  to  the  extent  of  a 
half  of  their  income,  (assuming  that  money  should  fall  in  value  50  per 
cent)  all  other  things  being  equal.  The  national  creditor  is  the 
characteristic  type  of  this  class  of  sufferers. 

"  All  commodities,  excepting  gold,  and  every  kind  of  property 
excepting  that  of  which  the  income  is  from  the  present  fixed,  as  is 
the  case  with  government  funds,  ought,  from  the  moment  that  the 
monetary  crisis  is  terminated  to  have  attained  in  the  gold  currency 
double  the  price  which  they  are  at  present  worth,  upon  the  supposi- 
tion quite  arbitrary,  1  admit,  of  the  depreciation  reaching  fifty  per 
cent.  Thus  a  house  or  a  landed  estate  now  worth  ;^4,000  or  100,- 
000  francs,  would  then  sell  for  ^'8,000  or  200,000  francs.  The 
HECTOLITRE  of  corn  or  of  wine,  the  quintal  of  iron,  or  the  METRE 
of  calico  will  undergo  the  same  rise,  or  at  least  if  no  change  con- 
ducive to  cheapness  be  introduced  into  the  conditions  of  their 
production,  or  into  the  relations  between  the  supply  and  the 
demand.  It  will  be  the  same  eventually  with  the  wages  of  labor, 
and  with  all  personal  services,  whether  rendered  in  the  factory  or 
the  farm,  or  from  the  liberal  professions;  we  are  warranted  in 
believing  that  their  value  will  have  doubled. 

"Thus,  as  a  definitive  analysis,  the  proprietors  of  land,  houses, 
and  other  real  estate,  manufactures,  merchants  and  their  auxiliaries 
of  every  kind;  public  functionaries  of  all  ranks;  and  also  those  who 
follow  the  different  learned  professions,  will  all  find  themselves  in 
the  end  compensated  in  the  new  state  of  things  with  advantages 
equal  to  those  which  they  now  enjoy,  all  other  things  being  equal. 
It  is  another  class  of  persons,  whom  we  have  previously  defined,  in 
a  general  way,  who  would  have  to  submit  to  a  sacrifice  in  propor- 
tion to  the  fall  in  the  precious  metals." 

Sec.  127.     M.   Chevalier   concedes  that  manufactures 


72  BIMETALLISM 

and  their  auxiliaries  of  every  kind,  public  functionaries 
of  all  ranks,  in  fact  all  persons  except  the  creditor  classes 
will  not  be  injured  by  a  fall  in  the  value  of  money.  In 
speaking  of  rewards  for  services,  and  the  value  of 
property,  he  says:  '*We  are  warranted  in  believing 
that  their  value  will  have  doubled."  It  is  another  class 
of  persons,  not  the  wealth  producers,  not  the  business 
men,  not  the  workers  in  society,  but  the  idle,  non- 
producing,  wealth-consuming  class  that  will  be  injured. 
In  re-reading  the  quotation  from  M.  Chevalier  it  will  be 
seen  that  the  class  for  whom  IVl.  Chevalier  is  particularly 
solicitous  is  composed  of  those  persons,  **  Whose  incomes 
in  monetary  units  remain  the  same,"  of  which  he  says, 
**The  national  creditor  is  the  characteristic  type  of  this 
class  of  sufferers. " 

Sec.  128.  If  a  fall  in  the  value  of  money  would  injure 
the  class  of  persons  over  whom  M.  Chevalier  is  shedding 
tears  of  sympathy,  does  it  not  necessarily  follow  that  an 
appreciation  in  the  value  of  money  would  benefit  them  ? 
And  have  they  not  been  reaping  the  benefits  of  an  appre- 
ciating money  continually  since  1873  ?  Notwithstanding 
the  fact  that  they  have  been  reaping  a  rich  harvest  from 
falling  prices  caused  by  a  constantly  appreciating  money, 
bimetallists  deny  that  these  men  have  acquired  a  vested 
right  to  do  so  perpetually ;  and  they  insist,  that 
prices  should  not  be  forced  to  a  lower  level,  and  they 
also  insist  that  if  by  means  of  bimetallism,  or  by  some 
other  means,  the  general  level  of  prices  prevailing  in 
1873  should  be  restored,  the  creditor  classes  would  have 
no  just  cause  of  complaint.  If  the  price  prevailing  in 
1873  could  be  restored,  the  prosperity  and  general 
business  activity  that  would  result  therefrom  would 
enable  the  wage-earning,  wealth-producing  classes  to 
recuperate  their  waning  fortunes. 


BIMETALLISM  73 

Sec.  129.     In  the  consideration  of  the  question  whether 

the  adoption  of  international  bimetallism  would  cause  an 

inflation  of  prices,  Professor  Nicholson  in  his  **  Money  and 

Monetary  Problems,"  pp.  156-157,  says: 

"  Assuming  for  the  present  that  under  any  circumstances  likely  to 
occur  the  ratio,  if  fixed  by  international  agreement,  within  any 
reasonable  limits  could  be  maintained — which  was  the  unanimous 
finding  of  the  Gold  and  Silver  Commission — let  us  consider  what 
would  be  the  effect  of  a  large  increase  in  one  or  both  of  the  two 
metals.  The  first  thing  to  notice  is  that  even  if  the  annual  supplies 
are  largely  increased  within  limits  of  all  probable — if  for  example, 
they  are  doubled,  or  even  quadrupled  in  twenty  years  — still  the 
effect,  having  regard  to  the  total  mass,  will  be  comparatively  small. 
The  quality  which  pre-eminently  adapts  the  precious  metals  for  a 
standard  of  value  Is  their  durability,  with  the  result  that  their  total 
mass  is  always  great  compared  with  the  annual  supply.  Secondly, 
we  must  observe,  that  all  of  the  increase  in  production  does  not  go 
to  coinage,  but  some  part,  and  probably  a  large  part,  will  be  used  in 
the  arts.  Thirdly,  as  already  explained,  under  the  quantity  theory 
of  money,  the  rise  in  prices  will  not  be  exactly  proportioned  to  the 
increase  in  the  quantity  of  metallic  money.  Fourthly,  we  must 
remember  that  under  present  conditions,  at  any  rate  the  civilized 
world  is  growing  in  wealth,  and  population,  and  that  in  consequence 
there  are  greater  demands  on  the  precious  metals.  Thus,  on 
balance,  the  conclusion  appears  to  be  that  any  increase  in  the  annual 
production  that  is  at  all  likely  to  take  place  would  not  so  much  tend 
to  bring  about  an  inflation  of  prices  as  to  keep  them  from  falling." 

Sec.  130.  There  has  never  been  a  time  in  the  history 
of  the  world  when  the  total  supplies  of  the  precious 
metals  have  been  sufficient  to  furnish  the  world  with  an 
adequate  supply  of  money.  Even  when  both  of  them 
had  free  access  to  the  mint  we  have  been  obliged  to 
supplement  them  with  fiduciary  money,  and  there  is  no 
probability  that  they  will  ever  be  sufficient  to  satisfy  the 
ever-increasing  demand  for  money.  This  being  true, 
the  act  demonetizing  silver  may  properly  be  designated, 
**  An  Act  of  Treason  against  the  Human  Race.'* 


74  BIMETALLISM 

Slc.  131.  The  Royal  Gold  and  Silver  Commission  of 
which  Lord  Herschell  was  chairman,  composed  of  six 
monometallists  and  six  bimetallists,  probably  the  ablest 
Commission  ever  convened,  unanimously  adopted  the 
following  statement : 

"When  we  examine  the  marked  contrast  which  the  period  prior 
to  1873,  presents  to  later  periods,  and  the  extensive  changes  in  the 
relative  production  of  the  two  metals  which  took  place  during  the 
earlier  period,  it  seems  impossible  to  conclude  that  the  circumstances 
connected  with  the  supply  sufficiently  account  for  the  altered  con- 
ditions in  the  relative  value  of  silver  and  gold  since  that  date.  In 
the  forty  years  between  1833  and  1873,  which  include  the  period  of 
the  great  gold  discoveries,  and  the  consequent  increase  in  the 
available  supply  of  that  metal,  but  little  change  in  the  gold  price  of 
silver  can  be  observed.  In  the  ten  years  from  1831  to  1840,  the 
proportion  which  the  value  of  silver  produced  bore  to  that  of  the 
gold  was  as  1.86  to  1  in  the  five  years  from  1851  to  1855,  the  pro- 
portion had  fallen  to  .288  to  1.  Yet  the  market  value  of  silver  only 
varied  between  15.75  to  1  in  the  former  period,  and  15.41  to  1  in  the 
latter.  On  the  other  hand,  if  we  compare  the  five  years  1871  to 
1875  with  the  five  years  1876  to  1880,  we  find  that  the  proportions 
borne  by  the  production  of  silver  to  that  of  gold  was  .710  to  1  in  the 
first  period,  and  .794  to  1  in  the  latter.  But  this  change,  almost 
insignificant  when  compared  with  those  to  which  we  have  called 
attention  above,  coincided  with  a  fall  in  the  market  value  from 
15.97  to  1  to  17.81  to  1. 

"  Looking,  then,  to  the  vast  changes  which  occurred  prior  to 
1873  in  the  relative  production  of  the  two  metals,  without  any 
corresponding  disturbance  in  their  market  value,  it  appears  difficult 
to  us  to  resist  the  conclusion  that  some  influence  was  then  at  work 
tending  to  steady  the  price  of  silver,  and  to  keep  the  ratio  which  it 
bore  to  gold  approximately  stable.  *  *  Undoubtedly,  the 
date  which  forms  the  dividing  line  between  an  epoch  of  approximate 
fixity  In  the  relative  value  of  gold  and  silver  and  one  of  marked 
Instability  is  the  year  when  the  bimetallic  system,  which  had 
previously  been  in  force  in  the  Latin  Union,  ceased  to  be  in  full 
operation;  and  we  are  irresistibly  led  to  the  conclusion  that  the 
operation  of  that  system,  established  as  it  was  in  countries,  the 


BIMETALLISM  75 

population  and  commerce  of  which  were  considerable,   exerted  a 
material  influence  upon  the  relative  value  of  the  two  metals. 

"  So  long  as  that  system  was  in  force  we  think  that,  notwith- 
standing the  changes  in  the  production  and  use  of  the  precious 
metals,  it  kept  the  market  price  of  silver  approximately  steady  at 
the  ratio  fixed  by  law  between  them,  namely  15)4  to  1.  *  * 
*  Nor  does  it  appear  to  us  A  PRIORI  unreasonable  to  suppose 
that  the  existence,  in  the  Latin  Union,  of  a  bimetallic  system,  with 
a  ratio  of  15>^  to  1  fixed  between  the  two  metals,  should  have  been 
capable  of  keeping  the  market  price  of  silver  steady  at  approximately 
that  ratio."     (See  "  International  Bimetallism,"  page  135.) 

Sec.  132.     The  Commission  also  report  that : 

"  We  think  that  in  any  conditions  fairly  to  be  contemplated  in  the 
future,  so  far  as  we  can  forecast  them  from  the  experience  of  the 
past,  a  stable  ratio  might  be  maintained  if  the  nations  we  have 
alluded  to  [The  United  Kingdom,  Germany,  United  States,  and  the 
Latin  Union]  were  to  accept  and  strictly  adhere  to  bimetallism  at  the 
suggested  ratio.  We  think  that  if  in  all  these  countries  gold  and 
silver  could  be  freely  coined,  and  thus  become  exchangeable  against 
commodities  at  the  fixed  ratio,  the  market  value  of  silver  as 
measured  by  gold  would  conform  to  that  ratio,  and  not  vary  to  any 
material  extent. 

"  We  do  not  deny  that  it  is  conceivable  that  these  anticipations 
might  be  falsified  by  some  altogether  unprecedented  discovery  of  one 
or  other  of  the  precious  metals,  and  that  the  maintenance  of  a  stable 
ratio  might  then  become  difficult.  But  for  practical  purposes,  we 
think  we  may  put  this  aside  and  reasonably  act  on  the  assumption 
that  no  such  grave  dislocating  cause  is  likely  to  arise.  We  have 
already  drawn  attention  to  the  fact  that,  during  the  time  covered  by 
the  great  gold  discoveries,  the  production  of  silver  continued  undi- 
minished, and  that  of  late  years,  when  gold  is  said  to  have  been 
appreciating,  the  production  of  silver  has  increased. 

"  Apprehensions  have  been  expressed  that,  if  a  bimetallic  system 
were  adopted,  gold  would  gradually  disappear  from  circulation.  If 
however,  the  arrangement  included  all  the  principal  commercial 
nations  we  do  not  think  there  would  be  any  serious  danger  of  such 
a  result.  Such  a  danger,  if  it  existed  at  all,  must  be  remote.  It  is 
said,  indeed,  by  some,  that  if  it  were  to  happen,  and  all  nations 
were  to  be  driven  to  a  system  of  silver  monometallism,  the  result 
might  be  regarded  without  dissatisfaction.    We  are  not  prepared  to 


76  BIMETALLISM 

go  this  length;  but,  at  the  same  time,  we  are  fully  sensible  of  the 
benefits  that  would  accrue  from  the  adoption  of  a  common  monetary 
standard  by  all  the  commercial  nations  of  the  world,  and  we  are  quite 
alive  to  the  advantages  of  an  adoption  by  these  nations  of  a  uniform 
bimetallic  standard,  as  a  step  in  that  direction."  (See  International 
Bimetallism,  p.  204.) 

Sec.  133.  The  monometallic  members  of  the  Royal 
Gold  and  Silver  Commission  were  Lord  Herschell,  Sir 
C.  W.  Fremantle,  Sir  John  Lubbock,  Lord  Farrer,  J.  W. 
Birch,  and  Leonard  H.  Courtney.  The  bimetallic 
members  were  Sir  Louis  Mallet,  Henry  Chaplin,  A.  J. 
Balfour,  Sir.  M.  H.  Houldsworth,  Sir  David  Barbour  and 
Sir  Samuel  Montague,  all  able  men.  While  the  first 
named  members  of  the  Commission  conceded  all  the  facts 
in  the  above  quotations  from  their  report  they  declined  to 
recommend  the  adoption  of  bimetallism  by  Great  Britain. 
The  six  bimetallists  made  a  separate  report,  in  which 
they  refer  to  the  above  and  other  concessions  in  favor  of 
bimetallism,  in  which  report,  they  declare  themselves  in 
favor  of: 

"  1st.    The  Free  coinage  of  both  metals  into  legal  tender  money. 

"  2nd.  The  fixing  of  a  ratio  at  which  the  coins  of  either  metal 
shall  be  available  for  the  payment  of  all  debts  at  the  option  of  the 
debtor."- 

Sec.  134.     Since   making    this    report,    (1887),    Mr 
Courtney,  one  of  the  ablest  financiers  on  the  Commission 
has  become  a  bimetallist  and  is  now   one  of  the  most 
pronounced  champions  of  bimetallism  in  England. 

Sec.  135.  Professor  Nicholson,  (see  Monetary  Prob- 
lems, page  116),  says: 

"  Opinions  differ  not  on  the  desirability,  but  on  the  possibility  of 
a  remedy.  I  do  not  suppose  there  is  any  banker,  or  financier,  or 
trader  with  a  practical  knowledge  of  the  question,  apart  from  a  few 
who  make  a  profit  from  speculative  exchanges,  who  would  not  admit 
that  if  the  old  ratio  between  gold  and  silver,  or  the  old  narrow  limits 


BIMETALLISM  77 

of  fluctuations  could  be  re-established  without  disturbance,  it 
would  be  on  excellent  thing  for  the  industrial  and  financial  world. 
The  whole  difficulty  lies,  in  this,  as  in  so  many  other  cases,  in  this 
little  word 'if '." 

Sec.  136.  No  doubt  Professor  Nicholson  is  correct 
in  saying  that  no  banker  or  financier,  or  trader  with  a 
practical  knowledge  of  the  question,  except  a  few  who 
make  a  speculative  profit  from  exchanges,  denies  the 
advantages  that  would  accrue  from  a  restoration  of  silver 
to  its  ancient  position  as  a  money  metal.  It  is  not  the 
men,  as  a  general  rule,  who  have  a  practical  knowledge 
of  economic  questions  who  oppose  bimetallism  in  the 
United  States.  The  question  in  this  country  is  no  longer 
an  economic  question,  but  a  political  one. 

Sec.  137.  Only  a  short  time  ago  the  great  mass  of  the 
people  in  this  country  were  practically  a  unit  in  favor  of 
the  restoration  of  silver  to  the  position  it  occupied  prior  to 
1873. 

Sec.  138.  Senator  Allison,  one  of  the  delegates  from 
the  United  States  to  the  International  Monetary  Confer- 
ence held  in  Brussels  in  1892,  in  stating  the  wishes  of  the 
people  of  this  country  (see  report,  page  46),  said: 

"  The  people  of  the  United  States  believe  it  to  be  practicable  to 
freely  use  both  metals  for  monetary  purposes,  and  thus  to  establish 
a  parity  of  value  between  them.  The  two  principal  parties  of  the 
United  States  are  not  divided  upon  this  question,  and  the  delegates 
to-  this  Conference  represent  not  only  the  party  which  is  now  in 
power,  but  also  that  which  has  been  restored  to  power  by  the  recent 
election  of  Mr.  Cleveland  to  the  Presidency.  Our  view  as  respects 
this  question  is  held  with  singular  unanimity  by  all  the  people  of 
the  United  States  as  one  for  the  promoting  of  the  common  interest 
of  all  nations.  We  desire  to  confer  with  you  cordially  and  frankly 
upon  measures  adapted  to  promote  the  interest  of  all  without  seek- 
ing any  special  advantage  for  the  United  States.  Our  recent  census 
shows  the  total  value  of  all  the  products  of  our  agriculture,  of  our 
forests,  of  our  mines  and  of  our  industries  to  have  been  in  1890, 


78  BIMETALLISM 

$13,000,000,000.  The  external  commerce  of  the  United  States  is 
increasing  year  by  year  and  was  in  the  last  fiscal  year  larger  than 
ever  before.  It  is  our  interest  to  extend  this  production  and  to 
enlarge  this  commerce.  Compared  with  these  large  values,  the 
product  of  silver  mining  in  the  United  States,  which  amounts  in 
round  numbers  annually  to  $50,000,000,  is,  as  you  will  see,  not  a 
large  factor;  but  its  monetary  use  affects,  we  believe,  all  these 
products,  all  values,  and  all  exchanges  of  them.  I  should  be  glad 
to  emphasize  the  fact  that  our  interest  in  this  matter  grows  out  of 
our  production  and  the  commerce  that  follows  it.  Even  if  our 
mines  should  cease  to  produce  silver  our  interest  in  this  question, 
which  we  share  in  common  with  the  commercial  world,  would  be  no 
less  urgent." 

Sec.  139.  James  G.  Blaine,  in  a  speech  delivered  in 
the  United  States  Senate  in  1880,  said: 

"  1  believe  the  struggle  now  going  on  in  this  country,  and  in  other 
countries  for  a  single  gold  standard,  would  if  successful,  produce 
wide-spread  disaster  in  and  throughout  the  commercial  world.  The 
destruction  of  silver  as  money  and  establishing  gold  as  the  sole  unit 
of  value  must  have  a  ruinous  effect  upon  all  forms  of  property 
except  those  investments  which  yield  a  fixed  return  in  money. 
Those  would  be  enormously  enhanced  in  value  and  would  gain  a 
disproportionate  and  unfair  advantage  over  other  species  of  property. 
If,  as  most  reliable  statistics  affirm,  there  are  nearly  $7,000,000,000 
of  coin  or  bullion  in  the  world,  very  equally  divided  between  gold 
and  silver,  it  is  impossible  to  strike  silver  out  of  existence  as  money 
without  results  that  will  prove  distressing  to  millions,  and  utterly 
disastrous  to  tens  of  thousands.  I  believe  gold  and  silver  coin  to 
be  the  money  of  the  constitution,  indeed,  the  money  of  the  American 
people,  anterior  to  the  constitution,  which  the  great  organic  law 
recognized  as  quite  independent  of  its  own  existence.  No  power 
was  conferred  on  Congress  to  declare  either  metal  should  not  be 
money.  Congress,  has  therefore,  in  my  judgment,  no  power  to 
demonetize  either.  If  therefore,  silver  has  been  demonetized,  I  am 
in  favor  of  remonetizing  it.  If  its  coinage  has  been  prohibited,  I  am 
in  favor  of  having  it  resumed.    I  am  in  favor  of  having  it  enlarged." 

Sec  140.  Prior  to  1896  it  is  universally  conceded  that 
an  overwhelming  majority  of  the  people  in  this  country 


BIMETALLISM  79 

were  in  favor  of  bimetallism  at  the  old  ratio  of  16  to  1. 
All  political  parties  in  framing  their  platforms  were  careful 
to  insert  a  plank  in  favor  of  the  free  coinage  of  silver. 
The  great  leaders  of  the  Republican  party — Blaine,  Gar- 
field, Conkling,  McKinley — in  fact  all  the  great  leaders, 
were  pronounced  bimetal  lists.  In  1896,  however,  certain 
influences  were  brought  to  bear  upon  the  National  Repub- 
lican Convention  sufficiently  powerful  to  force  through 
the  Convention  a  platform  containing  the  folIo\ving  plank: 

"  The  Republican  party  is  unreservedly  for  sound  money.  It 
caused  the  enactment  of  the  law  providing  for  the  resumption  of 
specie  payment  in  1879;  since  then  every  dollar  has  been  as  good  as 
gold.  We  are  unalterably  opposed  to  every  measure  calculated  to 
debase  our  currency  or  impair  the  credit  of  our  country.  We  are 
therefore,  opposed  to  the  free  coinage  of  silver  except  by  international 
agreement  with  the  leading  commercial  nations  of  the  world,  which 
we  pledge  ourselves  to  promote,  and  until  such  agreement  can  be 
obtained  the  existing  gold  standard  must  be  preserved.  AH  our 
silver  and  paper  currency  must  be  maintained  at  parity  with  gold, 
and  we  favor  all  measures  designed  to  maintain  inviolably  the 
obligations  of  the  United  States,  and  all  our  money,  whether  coin  or 
paper,  at  the  present  standard,  the  standard  of  the  most  enlightened 
nations  of  the  earth." 

Sec.  141.  It  will  be  seen  that  this  plank  recognized 
the  desirability  of  bimetallism,  provided  it  could  be 
obtained  through  international  agreement,  and  that  it 
pledged  the  party  to  promote  such  agreement.  Had  it 
not  been  for  this  pledge,  there  is  but  little  probabiliiy  that 
the  party  could  have  held  its  more  pronounced  bimetallic 
members  in  line.  Even  with  this  pledge,  hundreds  of 
thousands  of  Republicans  forsook  the  party,  formed  Silver 
Republican  clubs  and  supported  Bryan  on  a  free  coinage 
platform  for  the  Presidency.  But  the  Republican  party, 
reinforced  by  the  gold  standard  Democrats,  and  by  the 
expenditure  of  a  fabulous  sum  of  money  (over  ^20,000,000 
is  said  to  have  been  expended  by  that  party  in  the  Presi- 


80  BIMETALLISM 

dential  election  of  1896)  succeeded  in  electing  JWcKinley. 
The  Republican  party  has  now,  however,  passed  com- 
pletely under  the  control  of  the  money  power.  No 
pretense  will  hereafter  be  made  that  it  favors  even  inter- 
national bimetallism.  It  will  hereafter  stand  uncondition- 
ally for  a  single  gold  standard  and  rely  upon  the  glamour 
of  wealth,  the  power  of  special  privileges  and  the  expen- 
diture of  large  sums  of  money  for  its  perpetuation  in 
power.  Bimetallism  is,  with  them,  no  longer  an  economic 
question  but  a  political  one;  the  general  welfare  of  the 
people  and  the  prosperity  and  development  of  the  country 
will  not  be  considered;  only  the  successes  of  the  party 
will  be  regarded. 

Sec.  142.  At  the  annual  meeting  of  the  Republican 
League  held  in  Omaha  in  July,  1898,  a  resolution  was 
adopted  which  clearly  indicates  the  position  the  Republi- 
can party  will  occupy  on  this  question  in  the  future. 
These  Republican  Leagues  are  composed  of  ultra  parti- 
sans, of  men  who  place  the  success  of  party  above  all 
other  things,  of  men  who  hold  office,  or  who  have  been 
promised  an  office  and  are  impatiently  waiting  the  fulfill- 
ment of  the  promise,  men,  as  a  rule,  who  are  profoundly 
ignorant  of  the  most  elementary  principles  of  political 
economy,  and  yet  they  hesitate  not  to  commit  themselves 
and  the  party  they  represent  to  a  regime  of  perpetual 
falling  prices,  to  a  perpetual  concentration  of  wealth  in 
the  hands  of  the  few  and  of  the  perpetual  debasement 
and  degradation  of  the  many.  The  resolution  adopted  is 
in  the  following  words: 

"  We  are  uncompromisingly  in  favor  of  the  maintenance  of  a 
single  gold  standard,  and  that  the  medium  of  exchange,  of  whatever 
form,  issued  by,  or  under  the  authority  of  the  national  government 
shall  be  maintained  at  parity  with  gold,  the  universal  standard  of 
the  great  commercial  nations;  and  that  every  dollar  coined  or  issued 


BIMETALLISM  81 

under  national  laws  shall  have  an  equal  purchasing  and  debt-paying 
power.  We  are  unqualifiedly  opposed  to  the  free  and  unlimited 
coinage  of  silver,  and  re-affirm  the  St.  Louis  platform  on  this 
subject." 

Sec.  143.  It  will  be  seen  that  this  resolution  does  not 
favor  even  international  bimetallism,  but  is  uncondition- 
ally in  favor  of  a  gold  standard  and  unconditionally 
opposed  to  the  free  coinage  of  silver.  That  will  be  the 
position  of  the  Republican  party  in  the  future.  That  was 
really  its  position  in  1896,  but  certain  provisos  were 
inserted  which,  by  the  money  power,  were  understood  to 
be  meaningless,  but  which  kept  many  free  silver 
Republicans  in  line. 


CHAPTER  XI. 


THE  ADVANTAGES  OF  BIMETALLISM. 

Sec.  144.  Alexander  Hamilton,  in  his  report  on  the 
Mint,  says: 

"To  annul  the  use  of  either  of  the  metals,  as  money,  is  to 
abridge  the  quantity  of  circulating  medium,  and  is  liable  to  all  the 
objections  that  arise  from  a  comparison  of  a  full,  with  the  evils  of  a 
scanty  circulation." 

Sec.  145.  Thomas  Jefferson,  in  a  letter  to  Mr.  Hamil- 
ton dated  February,  1792,  said:  **  I  concur  with  you  that 
the  unit  must  stand  on  both  metals." 

Sec.  146.  Mr.  Bagehot,  in  his  testimony  before  the 
Commission  on  the  Depression  of  Trade  (see  International 
Bimetallism,  page  183),  said: 

"  A  great  number  of  States  which  are  grouped  together  in  what  is 
called  the  Latin  Union,  have  ceased  to  coin  silver  ever  since  the 
year  1874,  in  the  same  manner  which  they  did  before.  If  it  had  not 
been  for  that  change  of  policy,  the  silver  which  is  now  flooding  the 
London  market,  and  lowering  the  price  would  have  been  long  since 
in  the  mints  of  these  countries;  it  would  have  released  gold  from 
them,  and  the  combined  effect  of  the  two  operations  would  have 
been  that  the  comparative  value  of  gold  and  silver  would  have  been 
very  little  altered,  probably  not  at  all." 

Sec.  147.  M  de  Normandie,  Governor  of  the  Bank  of 
France,  a  delegate  to  the  Monetary  Conference  of  1881, 
said: 

"  One  sees  demonstrated  by  facts,  with  crushing  evidence,  the 
superiority  of  the  double  over  the   single  standard.    In  1837-38- 


THE  ADVANTAGES  OF  BIMETALLISM  83 

39  a  violent  crisis  raged  in  America.  Tiie  Federal  treasury  witlidrew 
its  deposits  from  the  United  States  Bank,  and,  to  establish!  the 
metallic  currency,  inundated  the  English  market  with  American 
paper.  At  London  the  situation  became  extremely  serious,  and  the 
metallic  reserve  of  the  Bank  of  England  fell  from  two  hundred 
million  francs  to  seventy-five  million.  *  *  *  Xhe  Bank 
of  England  was  even  forced  to  recur  to  the  Bank  of  France,  which 
loaned  it  fifty  million  francs  in  credit  values;  itself,  thanks  to  the 
French  bimetallic  system,  scarcely  feeling  any  shock  from  the 
catastrophe  at  New  York  and  London.  In  1848  raged  the  wheat 
crisis  common  to  both  countries.  The  Act  of  1844  was  suspended 
in  England;  loans  ran  only  for  thirty  days;  numerous  failures  upset 
the  market,  and  discount  arose  to  eight  per  cent.  In  France  the 
crisis  was  promptly  alleviated  by  selling  to  Russia  national  RENTES 
to  the  sum  of  fifty  million  francs,  and  discount  was  maintained  at 
five  per  cent.  In  1857  a  new  monetary  crisis,  answering  to  the  crisis 
in  America,  occurs  in  France  as  in  England;  and  this  time,  too,  it  is 
much  the  less  intense  on  the  French  side  of  the  Channel.  The 
Bank  of  France  is  forced  to  raise  its  rate  of  discount  to  ten  per 
cent.,  but  only  for  a  fortnight;  while  the  Bank  of  England,  whose 
gold  had  been  in  some  sort  drained  by  the  United  States,  sees 
itself  constrained  to  maintain  for  six  weeks  its  discount  at  the 
excessive  rate  of  ten  per  cent.        *        * 

"  In  1868  through  the  imprudent  over-development  of  societies 
with  limited  responsibility,  a  new  monetary  crisis  manifests  itself, 
this  time  more  intense.  The  Bank  of  England  attacked  by  the 
withdrawal  of  species  from  circulation  and  by  the  exhaustion  of  its 
note  reserve,  again  obtains  the  suspension  of  the  Act  of  1844 ;  the 
rate  of  its  discount  varies,  between  January  and  the  following  July, 
between  six,  eight,  and  ten  per  cent.  During  this  same  year,  the 
mean  rate  of  discount  at  the  Bank  of  France  is  not  above  four  and 
one-half  per  cent.  Thus  in  all  the  crises  that  have  arisen  at  epoch 
so  diverse,  in  circumstances  so  different,  one  sees  the  Bank  of 
France  less  distressed  than  the  Bank  of  England.  In  forty-five 
years  from  1837  to  1881,  the  former  modifies  the  rate  of  discount 
only  one  hundred  times.  The  latter  does  this  two  hundred 
and  eighty-two  times.  We  may  affirm  without  rashness  that 
the  French  monetary  system  is  not  without  influence  in  this  result. 
The  power  which  France  possesses  of  recurring,  alternately  or 
simultaneously,  to  the  two  metals  permits  her  not  only  to  employ 
the  one  or  the  other  according  to  circumstances,  and  to  allay  the 


84  BIMETALLISM 

effects  of  their  alternating  scarcity,  but  also  to  come  to  the  relief, 
not  without  profit  to  herself,  of  those  of  her  neighbors  who  want 
now  gold,  now  silver." 
(See  International  Bimetallism,  pages  196-7). 

Sec.  148.  Sir  Guilford  Molesworth,  a  distinguished 
English  economist  and  financier,  in  a  speech  delivered 
before  the  International  Monetery  Conference  of  1892,  in 
speaking  of  the  effect  of  the  gold  standard  in  England  on 
the  general  prosperity  of  the  people,  pp.  142-3-4,  said: 

'*  The  monetary  system  of  England  as  a  whole,  has  been  from 
the  first  to  the  last  a  source  of  inconvenience  and  danger,  and 
England  has  only  been  saved  from  serious  disaster  by  the 
Bimetallism  of  France,  notably  at  the  time  when  the  discoveries  in 
California  and  Australia  flooded  Europe  with  gold.        *       * 

"  It  must  be  evident  to  everyone  who  has  studied  the  subject  that 
the  English  Monetary  system  is  most  unsatisfactory.  In  1828  Mr. 
Baring  — no  mean  ruthority — pointed  out  the  evils  of  our  system, 
recommending  a  return  to  the  double  standard,  which  he  showed  to 
be  less  subject  to  those  sudden  jerks  and  changes  so  fatal  to  credit 
^nd  to  commerce.  He  urged  that  our  single  gold  standard  exposed 
he  country  to  stringencies  which  cramped  the  currency  and 
increased  distress.        *       * 

"  During  the  seven  years,  1883-1890,  the  Bank  of  France  only 
changed  its  rate  of  discount  seven  times,  whilst  the  Bank  of 
England  changed  it  sixty-two  times,  the  variations  in  France  only 
amounting  to  two  per  cent.,  whilst  those  in  England  amounted  to 
four  per  cent.       *       * 

"  Then  came  the  Baring  failure,  and  our  weakness  was  shown 
by  having  to  call  France  to  our  aid.  The  currency  of  France  has 
weathered,  without  difficulty  storms  to  which  the  Baring  failure 
was  mere  child's  play ;  for  example,  the  Franco-Prussian  war,  the 
communistic  struggle,  the  war  indemnity,  the  failure  of  the  Panama 
Canal,  of  the  metal  ring,  and  of  the  comptoir  d'  escompte.        *      * 

"  Fortunately  England,  although  her  currency  was  nominally 
monometallic,  practically  enjoyed  the  benefit  of  Bimetallism,  until 
1873,  except  when  she  had  to  depend  on  gold  for  replenishing  her 
bank  reserves,  and  when  she  had  to  make  large  remittances  of  silver 
to  India;  and  then  she  had  to  pay  for  her  folly  in  the  shape  of  an 


THE  ADVANTAGES  OF  BIMETALLISM  85 

agio  for  the  privilege  of  htr  clioice  of  the  particular  metal  she  might 
happen  to  require  urgently.  If  she  could  have  satisfied  her 
requirements  by  either  metal,  she  would  not  have  been  put  to  this 
expense.  But  so  long  as  Europe,  as  a  whole,  remained  practically 
Bimetallic,  England  in  all  her  vagaries  was  i<ept  tolerably  straight 
by  the  double  standard  of  France,  which  preserved  the  ratio  of  gold 
and  silver  throughout  the  world,  until  the  link  was  broken  in  1873. 
"  1  repeat,  '  It  is  gold  that  is  sick,  not  silver.'  and  unless  this  fact 
be  recognized  by  the  members  of  this  Conference  it  will  be  impossi- 
ble to  apply  the  proper  remedy  to  the  crisis  which  menaces  us." 

Sec.  149.  Can  there  be  any  question  as  to  which 
monetary  system  is  the  best — one  which  requires  but 
seven  changes  in  the  rate  of  discount  in  seven  years  in 
order  to  maintain  an  equilibrium  in  exchange,  or  one  that 
requires  sixty-two  changes  in  the  same  time. J*  The 
bimetallic  system  of  France,  as  Mr.  de  Normandie  says, 
gave  the  Bank  of  France  the  power  which  she  possessed 
of  **  recurring  alternately  or  simultaneously  to  the  two 
metals  and  permitted  her  not  only  to  employ  first  one  and 
then  the  other  according  to  circumstances  and  to  allay  the 
effects  of  their  alternating  scarcity,  but  also  to  come  to 
the  relief,  not  without  profit  to  herself,  of  those  of  her 
neighbors,  who  want  now  gold,  and  now  silver."  Since 
1803  the  monometallic  Bank  of  England  has  repeatedly 
been  obliged  to  borrow  money  from  the  bimetallic  Bank  of 
France  to  save  itself  from  bankruptcy.  Which  is  the 
better  system,  one  that  is  obliged  to  borrow  money  or  one 
that  has  mnney  to  loan  in  times  of  financial  depression.? 

Sec.  150.  Professor  Jevons,  in  his  **  Money  and 
Mechanism  of  Exchange,"  page  141,  says: 

"As  to  the  equilibrating  action  of  the  double  standard,  no  one  who 
has  inquired  into  the  matter  can  doubt  it  any  more  than  he  can 
doubt  that  one  scale  of  a  balance  will  go  up  when  the  other  comes 
down."    (Quoted  from  "  Internationa   Rimetallism,"  page  133). 


86  BIMETALLISM 

Sec.  151.  In  his  "  Investigations  in  Currency  and 
Finance  "  page  304,  Professor  Jevons  says: 

"  The  French  currency  law  has  thus  no  doubt  assisted  to  keep 
gold  and  silver  at  a  nearly  invariable  price,  as  compared  one  with 
the  other.  *  *  *  Although  both  gold  and  silver  have,  I 
believe,  suffered  considerable  depreciation,  yet  relatively  they  have 
not  varied  more  than  five  per  cent.  Some  persons  anticipated  that 
the  fall  in  the  value  of  gold  would  be  indicated  by  a  rise  in  the  price 
of  silver,  but  they  overlooked  the  fact  that  gold  would  spread  itself 
into  the  channels  previously  occupied  by  silver." 

I  also  quote  from  page  319  the  following: 

"  I  quite  concede  to  MM.  Wolowski  and  Cernuschi  that  the 
bimetallic  system  does  spread  fluctuations  of  supply  and  demand 
over  a  wider  area.  I  have  tried  to  explain  in  my  book  on  '  Money 
and  Mechanism  of  Exchange,'  that  gold  and  silver,  free  from  the 
action  of  a  legal  ratio,  are  like  two  unconnected  reservoirs  of  water, 
each  liable  to  be  raised  and  lowered  in  level  by  various  accidents. 
Establish  a  communication  between  these  reservoirs,  and  then  each 
new  supply  spreads  itself  over  a  double  area,  and  each  new  demand 
is  supplied  with  less  effect  upon  the  general  level.  The  legal  cur- 
rency ratio  of  15>^  to  1  actually  does  establish  a  communication  of 
this  sort  between  the  reservoirs  of  gold  and  silver  in  the  world." 
(Pp.  310-311.)  In  the  latter  part  of  the  last  century  15>^  to  1 
correctly  represented  the  natural  ratio.  For  some  fifty  years  it  was 
held  pretty  steady  at  this  point  by  the  action  of  the  French 
currency  law."  (Quoted  from  "  International  Bimetallism," 
Walker,  page  133.) 

Sec.  152.  The  advantage  of  bimetallism  over  the 
single  standard  either  of  gold  or  silver,  is  perhaps  as 
clearly  shown  in  the  illustration  given  by  Mr.  Jevons 
with  his  two  reservoirs  connected  by  a  pipe  as  by  any 
illustration  ever  given.  Mr.  Jevons,  like  all  other  well 
informed  economists,  recognized  the  fact  that  a  sudden 
fluctuation  in  the  volume  of  money  is  something  that 
should  be  guarded  against  as  far  as  possible,  and  he 
admits  that  bimetallism  would  be  a  powerful  auxiliary  in 
preventing  sudden  changes  in  its  volume. 


THE  ADVANTAGES  OF  BIMETALLISM  87 

Sec.  15s3.  In  his  illustration,  one  of  his  reservoirs  repre- 
sents the  volume  of  gold  money  now  in  stock,  the  other 
represents  the  volume  of  silver  money  now  in  stock;  the 
pipe  connecting  the  two  reservoirs  represents  the  free  coin- 
age of  both  metals  at  a  fixed  ratio  and  the  investment  of  the 
coins  of  both  metals,  equally  and  for  all  purposes,  with 
the  money  function.  If  at  any  time  the  production  of 
one  of  the  metals  should  largely  exceed  that  of  the  other, 
as  for  instance,  silver  from  1803  to  1820,  during  which 
time  there  was  nearly  four  times  as  much  in  value  of  silver 
produced  as  there  was  of  gold,  or  the  period  intervening 
between  1840  to  1860  when  there  was  two  and  one-half 
times  as  much  in  value  of  gold  produced  as  there  was  of 
silver,  then,  in  either  case,  the  metal  of  which  there  had 
been  the  greater  production,  being  poured  into  its  reser- 
vior,  would  flow  through  the  pipe  into  the  other  reservoir 
and  each  would  be  increased  in  volume  in  the  same 
proportion,  and  neither  would  fluctuate  in  value  so  much 
as  they  otherwise  would  were  it  not  for  this  equilibrating 
force,  and  they  would  not  fluctuate  at  all  as  measured  by 
each  other.  It  very  conclusively  appears  from  this 
illustration  that  so  long  as  both  metals  are  equally 
invested  with  the  money  function  at  a  certain  legal  ratio 
and  both  have  access  to  the  mint  on  equal  terms  that  it 
is  impossible  for  them  to  part  company,  and  also,  that  the 
mint  ratio,  fixed  by  law,  will  control  the  relative  value  of 
the  metals  without  any  regard  to  the  relative  amount  of 
the  metals  produced. 

Sec.  154.  Notwithstanding  this  splendid  illustration 
given  by  Mr.  Jevons,  proving  as  it  does,  that  the  relative 
amounts  of  the  metals  produced  would  have  no  influence 
on  their  relative  value  so  long  as  they  have  access  to  the 
mint  on  terms  of  equality,  yet  Mr.  Jevons,  in  connection 
with  the  reasoning  from  which  he  deduces  this  conclusion, 


88  BIMETALLISM 

speaks  about  a  natural  ratio  between  the  metals.  He 
says:  "  In  the  latter  part  of  the  last  century  15  ^^  to  1 
represented  the  natural  ratio.  For  some  fifty  years  it 
was  held  pretty  steadily  at  this  point  by  the  French 
currency  laws." 

Sec.  155.  Although  Mr.  Jevons  was  one  of  the  best 
inform.ed  political  economists  of  Europe,  and  although  he 
was  usually  correct  in  his  conclusions,  yet  at  times — when 
attempting  to  sustain  or  justify  certain  economic  errors — 
as,  for  instance,  gold  monometallism,  or  his  peculiar 
theory  of  the  cause  of  financial  crises — he  made  the  most 
absurd  blunders. 

SEC.  156.  The  idea  that  there  is,  ever  was,  or  ever 
can  be,  such  a  thing  as  a  natural  ratio  between  gold  and 
silver,  is  as  absurd  as  to  suppose  that  there  is  a  natural 
ratio  between  beef  and  potatoes.  The  ratio  at  which  the 
two  metals  have  been  coined  into  money,  is,  and  always 
has  been,  a  legal  and  arbitrary  one,  and  not  a  natural 
one.  At  the  same  time  that  the  Roman  Empire  was 
coining  gold  and  silver  at  the  ratio  of  12  to  1,  the  Moors 
in  Spain  were  coining  at  the  ratio  of  6}^  to  1  and  other 
nations  in  Europe  were  coining  at  ratios  ranging  from 
7  to  1  to  11  to  1.  At  the  same  time  the  Oriental  ratio 
was  about  6  to  1,  but  in  all  cases  the  ratio  was  a  legal 
and  not  a  natural  one.  In  all  cases  the  ratio  was  simply 
co-extensive  with  the  boundaries  of  the  kingdom  formulat- 
ing the  law. 

SEC.  157.  That  it  is  the  law  and  not  the  relative  amount 
of  the  metals  produced  that  controls  the  coinage  ratio  is 
conclusively  proven  by  a  reference  to  the  statistics  of 
production  and  ratio  of  coinage  during  the  present  century. 
From  1803  to  1820  there  was  sixty-two  times  as  much  in 
weight  of  silver  produced  as  of  gold,  and  if  the  relative 
amount  of  production  had  controlled  the  ratio  of  coinage, 


THE  ADVANTAGES  OF  BIMETALLISM  89 

the  ratio  should  have  been  62  to  1.  From  1820  to  1840 
there  was  thirty-one  times  as  much  in  weight  of  silver 
produced  as  there  was  of  gold,  and  if  the  relative  amounts 
produced  controlled  the  ratio  during  this  period,  the  ratio 
should  have  been  31  to  1.  From  1840  to  1860  there  was 
but  six  times  as  muchjin  weight  of  silver  produced  as  there 
was  of  gold,  and  the  ratio  of  coinage  should  have  been  6 
to  1.  During  all  this  time,  however,  the  mint  coinage 
ratio  of  France  of  15}4  to  1  remained  in  force  and  con- 
trolled the  coinage  ratio  of  the  world,  notwithstanding  the 
enormous  fluctuations  in  the  relative  production  of  the 
metals. 

Sec.  158.  It  is  only  necessary  to  consider  the  facts 
for  a  moment  to  become  convinced  of  the  absurdity  of  the 
natural  ratio  theory.  There  is  no  more  reason  in  Mr. 
Jevons'  natural  ratio  theory  than  there  is  in  his  attempt 
on  another  occasion  to  account  for  financial  crises  as  being 
probably  "  connected  with  a  periodic  variation  of  weather, 
affecting  all  parts  of  the  earth,  and  probably  arising  from 
increased  waves  of  heat  received  from  the  sun  at  average 
intervals  of  ten  years  and  a  fraction."  Both  of  these 
propositions  are  simply  attempts  to  sustain  certain  economic 
errors  in  spite  of  facts  that  prove  their  falsity.  (See  Sci- 
ence Primer  of  Political  Economy,  by  W.  Stanley  Jevons, 
page  120). 

Sec.  159.  Mr.  Gibbs  in  his  Colloquy  on  Currency,  p. 
232,  says: 

"  The  difference  which  the  law  of  dual  legal  tender  would  bring 
about  would  be  two  fold.  First,  the  silver  which  now  comes  into 
England  is  a  purchasable  commodity,  like  wool  or  anything  else, 
and  causes  some  additional  employment  of  the  currency  of  the 
country ;  whereas  every  ounce  that  would  corae  in  after  our  return 
to  the  old  law  would  be  of  itself  money,  and  would  be  available,  as 
Sir  Robert  Peel  said  in  1844,  for  remittance  abroad  in  discharge  of 
debt ;  or  else  would  supply  withdrawals  and  render  less  necessary 


90  BIMETALLISM 

the  frequent  changes  in  the  rate  of  discount;   besides,  probably, 
maintaining  the  Bank'Reserve  at  a  slightly  hihger  level. 

"  Secondly,  the  scramble  for  gold  would  cease.  It  exists  now 
and  must  continue,  both  because  other  nations  have  adopted  gold  as 
their  standard  money  in  competition  with  us,  and  because  they  see 
the  gold  price  falling  and  don't  know  how  low  it  may  fall.  There 
was  no  such  scramble  before  1873,  and  no  such  accumulations. 
France,  for  instance,  had  what  was,  under  the  then  circumstances, 
a  sufficient  store  in  the  Bank,  :€17,000,000 ;  she  now  has  :£68,000,- 
000,  while  the  Bank  of  England  has  but  :£25,000,000." 

Sec.  160.  The  world's  production  of  gold  since  1873 
is  estimated  by  our  best  statisticians  at  ^434,570,000 
sterling,  of  which  two-thirds  has  been  consumed  in  the 
arts  or  exported  to  the  Orient,  leaving  but  ;^14S,000,000 
for  coinage  purposes.  Since  1873,  there  has  been  taken 
out  of  circulation,  and  is  now  held  in  reserves  of  various 
kinds,  in  war  chests,  and  in  national  treasuries,  gold  as 
follows: 

In  Germany :£115,000,000 

Italy 20,000,000 

Russia 70,000,000 

Holland 4,000,000 

United  States 120,000,000 

Scandinavia 10,000,000 

Austria 6,000,000 

Bank  of  France 19,000,000 

Total :£364,000,000 

The  above  figures  are  taken  from  **A  Colloquy  on 
Currency,"  page  115,  published  in  1894,  and  refer  to 
conditions  then  existing.  The  amount  now  held  in  reserve 
has  been  largely  increased. 

Sec.  161.  This  ;^364,000,000  is  a  new  demand  for 
gold  created  since  1873;  nearly  all  of  which  is  out  of 
circulation.  A  portion  of  the  gold  in  the  United  States  is 
in  circulation,  but  only  a  small  portion.     Except  on  the 


THE  ADVANTAGES  OF  BIMETALLISM  91 

Pacific  Coast  very  little  gold  is  found  outside  of  the 
banks.  Deducting  the  ^145,000,000  coined  since  1873, 
and  making  no  allowance  for  loss  by  accident  and  private 
hoards, we  find  an  actual  contraction  in  the  metallic  money 
available  for  use,  of  ;^219,000,000,  (or  $1,095,000,000). 
Sec.  162.  Professor  John  E.  Cairnes,  writing  in  1860, 
shows  the  decided  superiority  of  bimetallism  over  a  mone- 
tary system  based  on  either  of  the  metals  by  preventing 
those  sudden  and  great  changes  in  the  value  of  the  money 
unit  that  would  be  liable  to  occur  if  either  were  adopted 
as  the  sole  standard  of  value.     He  says: 

"  The  crop  of  gold  has  been  unusually  large  ;  the  increase  in  the 
supply  has  caused  a  fall  in  its  value ;  the  fall  in  its  value  has  lead 
to  its  being  substituted  for  silver?  A  mass  of  silver  has  thus  been 
disengaged  from  purposes  which  it  was  formerly  employed  to  serve; 
and  the  result  has  been  that  both  metals  have  fallen  in  value 
together,  the  depth  of  the  fall  being  diminished  as  the  surface  over 
which  it  has  taken  place  has  been  enlarged." 

Sec.  163.  Professor  Emile  de  Laveleye,  who  was  one 
of  the  foremost  economists  of  Europe,  in  speaking  of  the 
injustice  resulting  from  the  demonetization  of  silver, 
increasing  as  it  does  the  burdens  of  the  wealth  producers, 
and  particularly  of  the  wrong  done  to  the  debtor  classes, 
said: 

"  In  the  Greek  democracies,  the  legislators,  and  noticeably 
Solon,  reduced  sometimes  all  debts  by  law,  in  order  that  the  people 
might  not  be  brought  to  misery  by  usurers.  After  the  discovery  of 
America  and  the  placers  of  California  and  Australia,  Nature,  and 
not  law,  reduced  the  weight  of  debts  by  increasing  the  quantity  of 
money.  Today  an  arbitrary  law  has  favored  creditors  in  a  most 
unjust  manner,  inasmuch  as  everywhere — as  in  England  before 
1816 — the  people  had  previously  the  right  to  pay  their  debts  in 
either  metal,  whereas  they  are  now  forced  to  pay  exclusively  in 
gold,  at  a  time  when  that  metal  is  becoming  more  and  more  scarce. 
What  could  be  more  odious?       *       *        Let  us  hope  the  future 


92  BIMETALLISM 

leaders  of  the  English  democracy  will  see  that  the  iniquitous 
monopoly  accorded  to  gold,  sacrifices  the  most  active  part  of  the 
nation  to  the  idle  part,  and  that  they  will  restore  to  the  two  precious 
metals  the  role  which  science,  history,  commerce,  and  the  free 
consent  of  the  peoples  had  guaranteed  them  throughout  the  past." 
(See  Report  International  Monetary  Conference,  1892,  p.  264). 


CHAPTER  XII. 


BIMETALLISM  IN  FRANCE. 

Sec.  164.  France  established  the  ratio  of  lSj4  to  1 
between  siiver  and  gold  in  1785.  It  was  understood  at 
the  time  of  the  adoption  of  this  ratio  that  gold  was  over- 
valued, and  such  o\  ervaluation  of  gold  was  naade  for  the 
express  purpose  of  attracting  gold  into  the  kingdom.  In 
1790,  a  commission  having  been  appointed  to  inquire  into 
and  ascertain  the  actual  relative  value  of  the  two  metals, 
recommended  that  the  value  of  gold  be  reduced  and  the  ratio 
fixed  at  14.87  to  1,  for  the  reason  that  the  ratio  adopted 
in  1785  encouraged  the  exportation  of  silver.  The  recom- 
mendation of  the  committee  was  not  concurred  in.  Again, 
in  1803  an  effort  was  made  to  bring  the  coinage  ratio 
nearer  to  that  of  the  ratio  of  the  surrounding  nations,  but 
after  an  extended  discussion  the  ratio  of  15j^  to  1  was 
re-enacted  and  still  remains  the  coinage  ratio  of  France. 
In  1790  the  coinage  ratios  of  the  surrounding  States  was 
as  follows- 

England 15.23    Austria 14.52    Geneva 14.71 

Holland 14.44    Saxony 14.77    Venice  14.82 

Flanders 14.51    Tuscany 14.51    Genoa 14.91 

(See  International  Monetary  Com.,  1878,  p.  280). 

Sec.  165.  It  will  be  seen  from  the  above  that  not  one 
of  the  surrounding  States  gave  gold  as  high  a  valuation  as 
the  French  ratio  adopted  in  1785  and  re-adopted  in  1803. 


94  BIMETALLISM 

The  nearest  approximation  was  in  England,  where  the 
ratio  was  15.23,  all  of  the  other  ratios  being  below  15  to  1. 
It  will  also  be  seen  that  the  oft-repeated  statement  that  the 
ratio  of  15^  to  1  was  adopted  by  France  in  1803  because 
that  was,  at  the  time,  the  exact  commercial  ratio,  is  in 
keeping  with  the  assertion  that  the  ratio  adopted  in  the 
United  States  in  1792  was  the  commercial  ratio  at  that 
time,  and  that  neither  of  said  statements  has  any  founda- 
tion in  fact. 

Sec.  166.  Mr.  Gibbs,  in  the  Appendix  to  his  *•  Collo- 
quy on  Currency,"  Table  G,  publishes  a  tabulated  state- 
ment showing  the  highest  and  the  lowest  agio  (premium) 
on  gold  and  silver  at  the  Bank  of  France  for  each  month 
from-  January,  1821,  to  June,  1894,  both  inclusive.  It 
appears,  from  this  tabulated  statement,  that  at  no  time 
between  January  1,  1821,  and  September  1,  1873,  was 
silver  at  a  discount;  that  for  seventeen  months  silver  was 
at  par;  for  twelve  months  of  the  time  there  were  no  quo- 
tations on  silver,  and  that  for  the  remaining  603  months 
silver  commanded  an  agio  or  premium  ranging  from  1  per 
mille  to  38  per  mille;  that  for  fifteen  months  there  were 
no  quotations  on  gold,  for  thirty-three  months  gold  is 
quoted  at  par,  for  forty-nine  months  gold  is  quoted  at  a 
discount  ranging  from  ^  per  mille  to  3%  per  mille,  and 
that  for  the  remaining  535  months  gold  is  quoted  at  a  pre- 
mium ranging  from  j4  per  mille  to  20  per  mille,  except 
for  the  months  of  March,  April  and  May,  1848,  when  the 
maximum  agio  on  gold  reached  65  per  mille  for  March  and 
April,  and  24^  per  mille  for  May. 

Sec.  167.  The  large  agio  on  gold  in  March,  April  and 
May,  1848,  was  occasioned  by  the  large  advances  the 
Bank  was  required  to  make  to  the  Provisional  Govern- 
ment and  to  the  City  of  Paris  on  account  of  the  revolution 
of  1848  and  has  no  economic  significance.     The  agio  on 


BIMETALLISM  IN  FRANCE  95 

gold,  except  for  the  months  of  March,  April  and  May, 
1848,  at  no  time  between  1821  and  1873  exceeded  20  per 
mille,  or  2  per  cent.  The  option  to  pay  in  gold  or  silver 
was  with  the  Bank,  and  the  Bank  hesitated  not  to  exer- 
cise this  option.  If  England,  for  instance,  required  a  large 
amount  of  silver  for  Indian  export  and  drew  on  the  Bank 
of  France  for  silver,  the  Bank  could,  and  did,  demand  a 
premium  which  England  was  obliged  to  pay  to  obtain  it. 
If,  at  another  time,  or  at  the  same  time,  some  other  coun- 
try required  gold  for  certain  purposes  and  drew  on  the 
Bank  of  France  for  gold,  the  Bank  could  and  did  demand 
a  premium  on  gold. 

Sec.  168.  It  will  be  seen  by  reference  to  the  tabulated 
statement  that  sometimes  the  agio  was  greater  on  gold 
than  on  silver,  sometimes  greater  on  silver  than  on  gold, 
and  that  for  more  than  nine-tenths  of  the  time  intervening 
between  January  1,  1820,  and  September  1,  1873,  the 
Bank  of  France  could,  on  account  of  the  bimetallic  law  of 
France,  which  gave  the  debtor  the  option  of  payment  in 
either  metal,  demand  and  enforce  the  payment  of  a  pre- 
mium on  either  of  the  metals,  or  on  both  at  the  same 
time,  when  either  might  be  required  from  any  country 
that  had  but  one  of  the  metals  in  stock. 

Sec.  169.  Mr.  Gibbs,  in  his ''Colloquy  on  Currency,'* 
page  50,  in  discussing  Bimetallism  in  France,  and  in 
reviewing  the  position  taken  by  Mr.  Giffen,  says  Giffen 
is  wrong  .when  he  says  that  France  was  practically  on  a 
silver  standard  from  1803  to  1850.     He  also  says: 

"  That  Currency,  the  money  chiefly  in  use,  is  one  thing,  and  the 
legal  money  standard  another.  Whatever  might  have  been  the 
money  in  current  use  in  France  In  those  years  matters  not  at  all, 
provided  that  the  mint  was  open  for  the  coinage  of  both  metals 
equally  at  a  fixed  ratio  with  vis  iiberatrlx.  *  *  What  has 
the  absence  or  presence  of  Gold  in  France  to  do  with  the  matter? 


96  BIMETALLISM 

The  law  gave  a  certain  choice  to  the  debtor.  If  there  were  no  gold 
to  be  got,  he  certainly  would  not  trouble  himself  about  paying 
in  gold." 

Sec.  170.  Mr.  Huskisson,  writing  in  1826,  says  that 
at  no  time  between  1803  and  1826  had  the  agio  on  gold 
coin  in  France  exceeded  one-fourth  per  cent;  that  some- 
times there  was  no  agio  at  all.  Sometimes  there  was  an 
agio  on  silver  and  sometimes  there  was  an  agio  on  both 
gold  and  silver  at  the  same  time.  Mr.  Gibbs  says  that 
the  agio  resulted  from  a  demand  for  export.  Under  the 
law  of  France,  no  man  could  demand  specifically  gold  or 
silver,  but  only  money;  the  option  to  pay  in  the  coins  of 
either  metal  was  with  the  debtor.  (See  **  Colloquy  on 
Currency,"  page  103). 

Sec.  171.  It  is  claimed  by  monometallists,  at  least  by 
some  of  them,  that  the  French  law  utterly  failed  to  main- 
tain a  parity  between  the  metals,  and  that  its  failure  is 
conclusive  evidence  that  bimetallism  is  an  impossibility. 
They  point  to  the  quotations  and  the  price  of  silver 
bullion  in  the  London  market  for  each  of  the  years  from 
1803  to  1873  and  gravely  inform  us  that  as  it  seldom 
happens  that  for  two  consecutive  years  the  quotations  are 
exactly  the  same,  it  is  evident  that  the  French  law  was  a 
failure,  and  that  any  law  which  may  attempt  to  maintain 
a  parity  will  be  a  failure.  They  concede  that  the  fluctu- 
ation in  the  price  of  silver  from  year  to  year  was  not 
great,  seldom  exceeding  one  or  two  cents  on  the  ounce, 
but  that  it  was  enough,  they  say,  to  prove  the  impossibility 
of  maintaining  the  parity  at  any  ratio.  The  difficulty 
with  these  gentlemen  is  that  they  do  not  distinguish 
between  money  and  a  piece  of  metal. 

Sec.  172.  What  bimetallism  proposes  to  do  is  not  to 
maintain  an  exact  parity  between  gold  and  silver  bullion, 
but  between  gold  and  silver  coin,  fabricated  from  the 


BIMETALLISM  IN  FRANCE  97 

bullion,  at  a  fixed  ratio.  This  it  has  done,  and  this  it  can 
do.  Under  a  proper  bimetallic  law  there  will  be  but 
trifling  fluctuation  in  the  relative  values  of  gold  and  silver 
bullion,  even  in  countries  still  under  the  monometallic 
regime;  and  no  fluctuation  in  the  value  of  the  money 
coined  from  them  in  the  country  where  the  bimetallic  law 
prevails. 

Sec.  173.  I  now  propose  to  show  that  the  fluctuation 
shown  in  the  quotations  of  the  price  of  silver  bullion  in 
the  London  market  arose  from  two  causes:  First,  imper- 
fection in  the  French  law  itself;  and,  secondly,  from  costs 
accruing  and  expenses  incurred  in  transporting  bullion  to 
and  from  the  French  mint. 

Sec.  174.  A  bimetallic  law,  in  order  to  produce  perfect 
results,  must  place  the  metals  upon  an  exact  equality  at 
the  designated  ratio.  This  the  French  law  did  not  do.  It 
fixed  the  ratio  between  gold  and  silver  coins;  it  conferred 
upon  those  coins  equally  the  money  function,  but  it  did  not 
fix,  nor  attempt  to  fix,  any  ratio  between  gold  and  silver 
bullion.  It  provided  that  the  silver  in  the  silver  five-franc 
piece  should  weigh  fifteen  and  one-half  times  as  much  as 
the  gold  in  the  gold  five-franc  piece.  This  ratio  has  been 
maintained  without  variation  since  1803.  The  mint  price 
of  the  bullion  has,  however,  undergone  various  changes. 
The  mint  charges  for  coining  gold  and  silver  bullion  were 
fixed  in  the  law  of  1803  at  9  francs  per  kilogram  of  stand- 
ard gold,  and  3  francs  per  kilogram  of  standard  silver. 
The  kilogram  of  standard  silver  contains  200  francs,  and 
that  of  standard  gold  3,100  francs.  The  mint  rate, 
therefore,  stood  under  the  French  law  as  approved  in 
1803,  not  1S)4  to  1,  but  as  3,091  to  197,  or  15.69  to  1. 
In  1835  the  mint  charge  on  silver  was  reduced  to  2  francs 
per  kilogram,  and  on  gold  to  6  francs.  The  mint  ratio, 
therefore,  became  as  3,094  to  198,  or  15.626  to  1,  and  so 


98  BIMETALLISM 

remained  until  1850.  In  1850  the  mint  charge  on  silver 
was  reduced  to  1  franc  50  centimes  per  kilogram.  The 
mint  ratio,  therefore,  became  3,094  to  198.50,  or  15.586 
to  1,  and  so  remained  until  1854,  when  the  mint  charge 
on  gold  was  raised  to  6  francs  70  centimes  per  kilogram. 
The  mint  ratio,  therefore,  became  as  3,093.30  to  198.50, 
or  15.583  to  1,  at  which  rate  it  now  stands.  (See  Inter- 
national Monetary  Conference  of  1878,  page  687). 

Sec.  175.  It  is  impassible,  even  in  a  bimetallic  country, 
to  maintain  the  exact  ratio  between  gold  and  silver  bullion 
that  is  fixed  by  law  as  the  ratio  of  gold  and  silver  coins, 
unless  the  coinage  is  gratuitous,  or  unless  the  seigniorage  or 
mint  charge  is  an  ad  valorem  charge  calculated  on  the 
value  of  the  bullion.  That  is  to  say:  If  the  ratio  between 
the  coins  is  16  to  1  the  mint  charge  for  coining  an  ounce  of 
gold  should  be  16  times  as  much  as  the  mint  charge  for 
coining  an  ounce  of  silver.  The  mint  charge  must  be 
upon  value  and  not  upon  weight.  In  no  other  way  can 
the  bullion  value  of  the  two  metals  be  kept  exactly  at 
the  coinage  ratio.  The  fluctuation  will  not  be  great,  will 
seldom  exceed  the  difference  between  the  actual  charge 
and  an  ad  valorem  charge  for  the  fabrication  of  the  coins. 
This  becomes  evident  when  we  observe  the  effect  of 
slight  changes  in  mint  charges  under  the  French  bimetallic 
law  of  1803. 

Sec.  176.     In  an  able  article  in  the  Quarterly  Journal 

of  Economicsy  January,  1896,  by  Professor  Willard  Fisher 

of  the   Wesleyan    University,  discussing  the  causes  of 

fluctuations  in  the  value  of  silver  bullion  between  1803 

and  1873  and  reviewing  a  previous  article  of  Professor 

Laughlin's,  Professor  Fisher  says: 

"  Professor  Laughlin  utterly  fails  to  grasp  what  Blmetalllsts 
claim  for,  and  expect  from,  their  system ;  and  he  makes  the  same 
mistake  made  by  Mr.  Robert  Giffen  in  his  'Case  Against 
Bimetallism.' 


BIMETALLISM  IN  FRANCE  99 

**  They  both  think  that  if  the  French  law  of  1803  had  any  effect 
upon  the  market  value  of  the  precious  metals,  it  must  have  kept 
the  commercial  ratio  at  exactly  15>^  to  1 ;  and,  in  citing  the  familiar 
fact  that  the  market  figures  fluctuated  up  and  down,  but  rarely,  if 
ever,  coincided  with  the  mint  ratio,  they  complacently  assume  that 
they  have  refuted  the  historical  argument  for  Bimetallism.  But  it 
is  absolutely  certain  that  no  such  identity  of  ratios  could  be  expected 
even  by  the  most  confident  Bimetallists.  So  long  as  there  are 
seigniorage  charges,  freight  charges,  insurance  fees,  or  any  other 
expenses  involved  in  passing  metal  through  the  mint,  the  nominal 
legal  ratio  is  never  the  effective  mint  ratio.  The  inefficiency  of  the 
French  law  in  steadying  the  relative  value  of  the  precious  metals 
can  never  be  proved  by  citing  differences  between  the  market  ratio 
and  the  nominal  legal  ratio,  unless  it  be  shown  that  the  differences 
are  greater  than  may  be  accounted  for  by :  (1)  Seigniorage  and  all 
other  mint  charges ;  (2)  Cost  of  transporting  the  metal  from  the 
market  whose  ratio  is  cited  to  the  mint;  (3)  Fees  for  insurance 
during  transit;  (4)  Agents'  commissions;  (5)  The  interest  on 
capital  temporarily  locked  up ;  (6)  Exigencies  or  sudden  and  urgent 
demand.  But  no  man  has  ever  so  much  as  attempted  to  examine 
thus  fully  the  deviation  of  the  London  market  from  the  French 
mint  ratio.  Let  just  a  simple  hint  as  to  the  effects  of  these  various 
charges  and  expenses  suffice." 

Sec.  177.  Sir  Guilford  Molesworth,  delegate  from 
British  India  to  the  International  Monetary  Conference  of 
1892,  in  an  address  to  the  Conference,  (see  page  225)  in 
speaking  of  the  influence  of  the  French  law  of  1803  in 
holding  the  metals  together,  said: 

"  Now  let  us  see  what  France  has  accomplished  almost  single- 
handed.  For  seventy-three  years  she  has  kept  the  whole  world 
practically  bimetallic.  It  is  true  that  during  the  last  few  years  of 
that  period  she  was  helped  by  the  Latin  Union,  but  she  was  the 
moving  spirit.  She  preserved  the  equilibrium  of  gold  and  silver 
approximately  stable  at  the  ratio  of  1  to  15;^,  in  spite  of  almost 
overwhelming  influences  tending  to  disturb  the  equilibrium.  First, 
the  American  ratio  for  a  long  period,  was  3X  per  cent,  higher,  and 
for  another  period  3X  per  cent,  lower  than  the  French  ratio.  At 
one  period  the  relative  production  of  gold  was  65  per  cent,  less  than 
that  of  silver ;  at  another  period  it  was  more  than  200  per  cent. 


100  BIMETALLISM 

greater.  At  one  time  silver  coinage  almost  ceased ;  at  another  time 
gold  coinage  almost  ceased.  At  various  periods  England,  whose 
obligation  could  only  be  satisfied  in  gold,  was,  as  Baring  has  told 
us,  forestalled  by  others  speculating  on  the  bank's  own  necessities. 
At  other  periods,  Germany  and  India,  whose  obligations  could  only 
be  satisfied  with  silver,  were  exposed  to  similar  influences  tending 
to  create  an  agio  on  the  metal  that  might  happen  to  be  urgently  in 
demand.  *  With  such  remarkable  experience  to  guide  us,  it 
appears  probable  that  the  United  States  of  America,  if  they  had  the 
courage  to  make  the  plunge,  might  keep  the  equilibrium  single- 
handed;  at  all  events,  a  combination  with  the  Latin  Union,  would 
place  the  matter  beyond  a  doubt.  The  addition  of  India  and 
England  would  make  the  combination  unnecessarily  strong.  Other 
nations  might,  or  might  not  join,  but  their  adhesion  or  abstention 
would  be  a  matter  of  no  practical  importance,  for  with  such  a 
combination  the  world  would  be  practically  bimetallic." 

Sec.  178.  The  discovery  of  gold  mines  in  California 
and  Australia  resulted  in  the  production  of  such  vast 
quantities  of  gold  that  the  creditor  classes  set  on  foot  a 
scheme  for  its  demonetization.  These  gentlemen,  at  that 
time,  as  afterwards  in  1873,  becoming  alarmed  at  the 
thought  that  by  means  of  the  abundant  money  the  debtors 
might  possibly  be  able  to  discharge  their  obligations,  and 
become,  in  fact  as  well  as  in  name,  free  men,  inaugurated 
a  war  of  extermination  against  gold,  and  they  succeeded 
in  inducing  Holland,  Belgium,  Austria  and  several  of  the 
German  States  to  demonetize  their  gold  coins.  Russia, 
at  that  time  a  heavy  producer  of  silver,  influenced  by  the 
same  arguments,  passed  an  edict  preventing  its  exporta- 
tion from  Russia.  France,  however,  refused  to  become  a 
party  to  this  scheme  of  demonetization,  and  adhered 
strictly  to  her  cherished  principle  of  bimetallism,  and  it 
was  soon  found  that  as  long  as  France  kept  her  mints 
open  to  the  unlimited  coinage  of  both  gold  and  silver  at 
her  ratio  of  15^  to  1,  it  was  impossible  for  gold  to  fall 
much  below  that  ratio.     M.  Chevalier,  the  leading  mono- 


BIMETALLISM  IN  FRANCE  101 

metallist  of  France,  admitted  that  the  maximum  effect  of 
the  gold  discoveries  of  California  and  Australia  was  to 
change  the  silver  price  of  that  metal  4^  per  cent.;  and 
Professor  Jevons,  a  gold  standard  advocate  of  Great 
Britain,  says  that  the  whole  permanent  effect  of  the 
California  and  Australian  discoveries  was  not  above  lj4 
per  cent.  When  we  take  into  consideration  the  fact  that 
in  the  short  space  of  twenty  years  the  gold  money  of  the 
world  was  doubled  by  these  discoveries,  and  that  several 
nations,  frightened  with  the  doleful  cries  of  the  money 
lords,  demonetized  their  gold  coins  and  threw  their  stock 
of  gold  upon  the  market,  and  that  during  the  same  time, 
but  very  little  silver  comparatively  speaking  was  pro- 
duced, and  notwithstanding  all  these  facts,  France  with 
her  bimetallic  law  of  15^  to  1,  unaided  and  alone  was 
able  to  hold  the  commercial  values  of  the  two  metals 
comparatively  steady  in  all  the  markets  of  the  world, 
and  that  the  whole  permanent  effect  of  all  these  causes 
combined  did  not  cause  the  value  of  gold  as  measured  by 
silver  to  decline  more  than  1;^  per  cent.,  who  will  have 
the  hardihood  to  say  that  the  bimetallic  law  of  France 
was  a  failure.** 


CHAPTER  XIII. 


GOLD  STANDARD  IN  ENGLAND. 

Seg.  179.  That  the  gold  standard  has  been  a  curse  to 
England,  and  to  every  other  country  where  it  has  been 
adopted  as  the  sole  standard  of  value,  there  can  be  no 
question.  The  act  demonetizing  silver  in  England  was 
adopted  in  1816.  At  that  time  the  money  in  use  in 
England  was  depreciated  inconvertible  paper  money. 
Specie  payments  had  been  suspended  in  England  in  1797, 
and  were  not  resumed  until  several  years  after  the 
demonetization  of  silver.  A  very  interesting  and  instruc- 
tive account  of  the  fluctuations  in  the  value  of  paper 
money  during  the  period  of  suspension  of  specie  pay- 
ments is  given  by  Leonard  H.  Courtney  in  the  article  on 
Banking  in  the  Ninth  Edition  of  the  Encyclopedia 
Britannica,  Vol.  III.,  page  320,  from  which  I  quote  the 
following: 

"  It  had  been  generally  supposed,  previous  to  the  passing  of  the 
*  Restriction  Act '  that  bank-notes  would  not  circulate  unless  they 
were  immediately  convertible  into  cash.  But  the  event  showed 
that  this  was  not  really  the  case.  Though  the  notes  of  the  Bank  of 
England  were  not  at  the  passing  of  the  '  Restriction  Act'  declared 
by  law  to  be  legal  tender,  they  were  rendered  such  in  practice,  by 
being  received  as  cash  in  all  payments  on  account  of  Government, 
and  by  the  vast  majority  of  individuals.  For  the  first  three  years  of 
the  restriction,  their  issues  were  so  moderate  that  THEY  NOT  ONLY 
KEPT  ON  A  PAR  WITH  GOLD,  BUT  ACTUALLY  BORE  A  SMALL 
PREMIUM.     But  in  1801,  and  1802,  and  1803,  they  were  so  much 


GOLD  STANDARD  IN  ENGLAND  103 

increased  that  they  fell  to  a  discount  of  from  eight  to  ten  per  cent. 
In  1804  they  again  recovered  their  value ;  and  from  that  year  to 
1808,  both  inclusive,  they  were  at  a  discount  of  2>^  per  cent.    In 

1809  and  1810,  however,  the  directors  appear  to  have  embarked  on  a 
new  course,  and  to  have  entirely  lost  sight  of  the  principles  by 
which  their  issues  had  previously  been  governed ;  for  the  average 
amount  of  bank-note  circulation,  which  had  not  exceeded  17>^ 
millions  nor  fallen  short  of  16>^  millions  in  any  one  year  from  1802 
to  1808,  both  inclusive,  was  in  1809  raised  to  ^£18,927,833,  and  in 

1810  to  £22,541,523.  The  issues  of  country  banks  were  increased  in  a 
still  greater  proportion;  and  as  there  was  no  corresponding  increase 
of  the  business  of  the  country,  the  discount  on  the  bank-notes  rose 
from  lYz  in  1808  to  from  13  to  16  per  cent,  in  1809  and  1810.        + 

In  1812  it  was  at  an  average  discount,  as  compared  with  bullion,  of 
20  per  cent.;  in  1813,  of  23  per  cent;  and  in  1814,  when  the 
maximum  of  depreciation  was  attained,  it  was  at  25  per  cent." 

Sec.  180.  The  above  facts  afford  conclusive  evidence 
that  it  is  not  necessary  that  paper  money  should  be 
redeemable  in  coin  in  order  to  maintain  its  value,  but  that 
its  value  is  determined  by  its  volume;  and  also  proof  of 
the  fact  that,  if  sufficiently  limited  in  volume,  it  will  com- 
mand a  premium  in  gold  coin. 

Sec.  181.  The  Resumption  Act  of  1819,  commonly 
called  **Sir  Robert  Peel's  Act,'*  provided  that  specie 
resumption  on  a  gold  basis — silver  having  been  demone- 
tized in  1816 — should  take  place  in  1823.  In  order  to 
accomplish  specie  resumption  it  was  well  understood  that 
it  would  be  necessary  not  only  to  contract  the  volume  of 
money  but  also  to  contract  credits,  and  accordingly  the 
policy  of  contraction  was  vigorously  prosecuted.  Sir 
Archibald  Alison  describes  the  effects  of  the  monetary 
legislation  of  this  period  upon  the  people  in  general  and 
upon  the  country,  and  shows  that  everybody  except  the 
great  capitalists  was  injured,  but  that  capitalists  fattened 
on  the  spoils.     He  says: 


104  BIMETALLISM 

"  The  capital  which  had  been  realized  during  the  war  [with 
Napoleon]  had  been  so  great,  the  influence  of  the  moneyed  interest 
so  powerful,  that  the  Legislature  became  affected  by  the  desires  of 
its  possessors.  The  monetary  bill  of  1819,  before  many  years  had 
elapsed,  added  50  per  cent,  to  the  value  of  money  and  weight  of 
debt  and  taxes.  +  Small  landed  proprietors  were  generally 
ruined  from  the  fall  of  prices ;  the  magnates  stood  forth  in  increased 
luster  from  the  enhanced  value  of  their  revenues.  Industry  was 
querulous  from  long  continued  suffering;  wealth  ambitious  from 
sudden  exaltation."  (See  Continuation  of  History  of  Europe, 
Volume  1,  page  3). 

He  also  says: 

"  The  effects  of  this  sudden  and  prodigious  contraction  of  the 
currency  were  soon  apparent,  and  they  rendered  the  next  three 
years  a  period  of  ceaseless  distress  and  suffering  in  the  British  Isles. 
The  accommodation  granted  by  the  bankers  diminished  so  much,  in 
consequence  of  the  obligation  laid  upon  them  of  paying  in  specie, 
when  specie  was  not  to  be  got,  that  paper  under  discount  at  the 
Bank  of  England,  which  in  1810  had  been  :£23,000,000  and  in  1815 
not  less  than  £20,660,000,  sank  in  1820  to  :£4,672,000,  and  in  1821 
to  :£2,722,000.  The  effect  upon  prices  was  not  less  immediate  and 
appalling.  They  declined  in  general  within  six  months  to  HALF 
THEIR  FORMER  AMOUNT,  AND  REMAINED  AT  THAT  LOW  LEVEL 
FOR  THE  NEXT  THREE  YEARS.  Distress  was  universal  in  the 
latter  months  of  1819 ;  and  that  distrust  and  discouragement  was 
felt  in  all  branches  of  industry,  which  is  at  once  the  forerunner  and 
the  cause  of  disaster." 

Sec.  182.  Sir  James  Grahan  in  his  work  entitled 
"Corn  and  Currency,"  published  in  1826,  says: 

"Whether  we  regard  private  debts  or  public  burdens,  the  effects 
of  the  measure  of  1819  have  been  to  enact  that  for  EVERY  LESS 
SUM  OWING  A  GREATER  SHALL  BE  PAID;  prices  falling,  but 
pecuniary  engagements  remaining  undiminished,  the  farmer  has  no 
profit,  the  landlord  no  rent,  the  manufacturer  no  customer,  the 
laborer  no  employment ;  a  revolution  of  property  and  a  derange- 
ment of  the  whole  frame  of  society  must  necessarily  ensue.  + 
Amidst  the  ruin  of  the  farmer  and  the  manufacturer,  the  distress  of 
the  landlords,  and  the  insurrections  of  the  populace  without  bread 


GOLD  STANDARD  IN  ENGLAND  105 

and  without  employment,  one  class  flourished  and  was  triumphant ; 
the  annuitant  and  the  tax-eater  rejoiced  in  the  increased  value  of 
money;  in  the  sacrifice  of  productive  industry  to  unproductive 
wealth,  in  the  victory  of  the  drones  over  the  working  bees." 

Sec.  183.  Senator  Jones  in  his  October,  1893,  speech, 
page  241,  in  discussing  the  evil  effects  resulting  from  the 
adoption  of  the  gold  standard  in  England,  says: 

"  At  the  demand  of  the  creditor  classes  the  gold  standard  was 
adopted  in  England  after  the  Napoleonic  wars,  in  order  that  the  war 
debt,  a  large  portion  of  which  was  incurred  in  paper,  might  be  paid 
in  gold.  In  his  Financial  History  of  England,  Mr.  Doubleday 
states  his  belief  that  for  a  portion  of  the  war  period  the  pound  note, 
with  which  the  public  securities  of  Great  Britain  were  bought,  was 
not  worth  in  specie  over  7  or  8  shillings  in  the  pound — about  33  to 
38  per  cent.  The  debt  being  afterwards  by  law  made  payable, 
pound  for  pound  in  gold,  it  is  obvious  that  the  bondholders  of 
Great  Britain  mulcted  the  people  of  that  country,  as,  at  a  later 
period,  the  public  creditors  of  the  United  States  mulcted  the  people 
of  this  country." 

Sec.  184.  At  the  time  of  the  adoption  of  the  Resump- 
tion Act  in  1819  there  were  160,000  land-owners  in  Great 
Britain,  in  seven  years  in  consequence  of  the  ruinous  fall 
in  prices,  the  land-owners  had  been  reduced  to  30,000. 
In  the  short  space  of  seven  years  130,000  men,  who, 
prior  to  1819  were  prosperous  and  happy  as  landed 
proprietors,  were  reduced  to  the  position  of  tenants  on 
land  they  formerly  owned,  or  turned  adrift  to  wander  as 
vagabonds  over  the  face  of  the  earth.  This  is  a  part  of 
the  price  paid  by  England  for  her  gold  standard,  but  a 
part  only  as  the  distress  in  every  branch  of  industry, 
occasioned  by  those  twin  acts  of  infamy,  that  of  1816  and 
1819,  were  nearly  as  great,  and  have  only  been  equalled 
by  the  wrong  and  injustice  inflicted  on  humanity  by  those 
other  two  infamous  acts  of  legislation  in  this  country — 
the  acts  of  1873,  which  struck  the  silver  dollar  from  the 
list  of  coins  and  that  of  1874,  which  deprived  it  of  its 
legal  tender,  debt-paying  power. 


CHAPTER  XIV. 


DEPRECIATION  OF  SILVER. 

Sec.  185.  People  wonder  why  miners  can  still  pro- 
duce silver  when  silver,  they  say,  has  fallen  in  value  50 
per  cent.  The  difficulty  in  their  reasoning  is  that  their 
premises  are  false.  Silver  has  not  fallen  in  value  50  per 
cent.  The  purchasing  power  of  silver  was  as  great  in 
1893  as  it  was  in  1873.  Since  1893  it  has  declined  in 
value  somewhat,  but  not  nearly  as  much  as  gold  has 
appreciated  in  value.  The  divergence  in  value  between 
the  metals  has  been  caused  chiefly  by  an  appreciation  in 
the  value  of  gold. 

SEC.  186.  Sir  Guilford  Molesworth  in  the  1892  Inter- 
national Monetary  Conference,  page  139,  said: 

"A  very  distinguished  member  of  this  Conference  has  likened 
silver  to  a  sick  man  whose  state  has  been  but  aggravated  by  the 
medicines  which  have  been  administered  to  cure  him;  but  I  think 
that  this  is  not  surprising,  inasmuch  as  the  physicians  have  not 
merely  mistaken  the  character  of  the  illness,  but  they  have  mistaken 
the  invalid.  It  is  gold  who  is  the  sick  man,  not  silver.  They  have 
mistaken  the  bloated  condition  of  gold  for  a  symptom  of  health, 
whereas  it  is  the  symptom  of  a  dangerous  disease  which  now 
threatens  to  develop  into  a  fearful  crisis,  which,  as  M.  de  Rothschild 
says,  would  be  frightful  to  contemplate." 

Sec.  187.     Professor  Marshall,  in  his  testimony  before 

the   Royal   Gold   and   Silver  Commission  in  answer  to 

Question  9,625,  said: 

"As  regards  the  depreciation  of  silver,  I  am  rather  puzzled  by  the 
statement  in  the  warrant  appointing  the  Commission  that  it  is  to 
inquire  into  the  depreciation  of  silver.  I  do  not  admit  that  silver 
has  depreciated  in  the  sense  that  it  has  less  general  purchasing 
power.  I  think  it  has  appreciated  and  has  now  higher  purchasing 
power  as  regards  commodities  than  it  had  before."  (Quoted  from 
Walker's  International  Bimetallism,  page  216). 


GOLD  STANDARD  IN  ENGLAND  107 

Sec.  188.  The  London  Statisty  November  5,  1892, 
contained  the  the  following: 

"  We  have  seen  that  between  1873  and  1890  all  gold  prices  fell 
ruinously.  We  have  also  seen  that  during  the  same  period  silver 
prices  did  not  fall;  in  other  words,  that  while  a  smaller  quantity  of 
gold  year  after  year,  exchanges  for  a  larger  quantity  of  all  other 
commodities,  silver  included,  the  same  quantity  of  silver,  or  nearly 
the  same  exchanges  for  the  same  quantity  of  all  other  commodities, 
gold  excluded.  Does  it  not  necessarily  follow  that  it  was  the 
conditions  which  determined  the  value  of  gold,  which  altered, 
and  not  the  conditions  which  determined  the  value  of  silver,  or  to 
put  the  matter  in  perhaps  plainer  language,  does  it  not  necessarily 
follow  that  the  value  of  silver  during  the  last  twenty  years  has  been 
far  more  stable  than  the  value  of  gold?" 

Sec.  189.  Prior  to  the  closure  of  the  Indian  mint  in 
1893,  the  purchasing  power  of  silver  as  measured  by 
commodities  had  not  fallen  at  all.  It  is  probable  that 
since  that  time  there  has  been  a  slight  depreciation,  but 
not  enough  to  check  the  production  of  silver.  The  value 
of  silver  produced  in  1893,  rated  at  the  ratio  of  16  to  1, 
was  $214,000,000.  The  value  of  that  produced  in  1896 
was  $213,000,000,  substantially  the  same.  In  1897  it 
was  $236,730,300. 

Sec.  190.  It  is  impossible  to  tell  whether  gold  has 
appreciated  in  value,  or  whether  silver  has  depreciated, 
by  comparing  the  two  metals  with  each  other.  We  know 
that  the  ratio  between  the  metals  in  1873  was  about  15^ 
to  1,  and  we  know  that  now  it  is  about  34  to  1.  We  see 
that  a  great  divergence  between  the  values  of  the  two 
metals  has  taken  place.  This  divergence  might  have 
been  caused  either  by  a  fall  in  the  value  of  silver,  or  by 
a  rise  in  the  value  of  gold,  or  there  may  have  been 
changes  in  the  value  of  both  of  them  producing  this  result. 
We  can  determine  which  has  changed  in  value,  or  pur- 
chasing power,  only  by  comparing  each  of  them  with 


108 


BIMETALLISM 


commodities.  If  we  find  that  gold  will  exchange  for  the 
same  or  for  nearly  the  same  amount  of  commodities  now 
that  it  would  in  1873,  and  that  silver  will  exchange  for 
only  about  one-half  as  much  as  it  would  at  that  time, 
then  we  must  conclude  that  silver  has  fallen  in  value  as 
measured  by  commodities  50  per  cent. ;  if,  on  the  contrary, 
we  find  that  silver  as  measured  by  commodities  has  the 
same  purchasing  power,  or  nearly  the  same  as  it  had  in 
1873,  and  that  gold  on  the  average  will  exchange  for 
twice  as  much  as  it  would  in  1873,  then  we  must  find 
that  gold  has  appreciated  in  value  100  per  cent. 

Sec.  191.  Professor  Nicholson  in  his  **  Money  and 
Monetary  Problems,"  page  135,  gives  the  following  list  of 
articles  and  the  value  of  each  as  measured  by  gold  bullion 
and  by  silver  bullion  in  1867-77  and  in  1893: 

TABLE  I. 

Ten  ounces  of  silver  at  the  average  price  in 


Would  exchange  for 


English  Wheat 

Town-made  Flour.... 
German  Beet  Sugar. 
Common  Bar  Iron ... 

Mid.  up.  Cotton 

English  Lead 

English  Wool 

Leather 


TABLE  II. 


123.27  grains  of  standard  gold  at  the  average  price  of 

1867-77 

1893 

^/oiild  exchange  for 

Lbs. 

Lbs. 

English  Wheat 

171 
122 

93 
272 

26.6 
109.3 

12  15 

15 

349 

Flour 

215 

Sugar 

149 

Iron 

448 

Cotton 

52 

I  ead                              

229.7 

Wool           

23.4 

I  eather 

18.6 

GOLD  STANDARD  IN  ENGLAND 


109 


Sec.  192.  It  will  be  seen  from  the  above  tables  that 
silver  as  measured  by  commodities  had  not  declined  in 
purchasing  power  prior  to  1893,  but  had  slightly  appreci- 
ated, and  that  gold  had  nearly  double  the  purchasing 
power  in  1893  that  it  had  in  1867-77.  Does  not  this  con- 
clusively prove  that  the  divergence  between  the  metals 
has  been  caused  not  by  a  depreciation  in  the  value  of 
silver,  but  by  an  appreciation  in  the  value  of  gold,  and 
that  Sir  Guilford  Molesworth  was  right  when  he  said  it 
was  gold  that  was  the  sick  man?  And  is  it  not,  also, 
conclusively  shown  by  the  above  facts  that  silver  has 
been  much  more  stable  in  value  since  1873  than  gold? 

Sec.  193.  The  average  prices  of  commodities  are 
determined  by  **  Index  Numbers"  calculated  on  the 
average  wholesale  prices  of  a  large  number  of  commodities 
extending  over  a  series  of  years.  Tables  of  *'  Index 
Numbers"  have  been  prepared  by  different  statisticians, 
and  while  they  substantially  agree,  yet  those  prepared 
by  Mr.  Sauerbeck  are  usually  regarded  as  having  been 
prepared  with  greater  exactness  than  those  by  other 
statisticians. 

Sec.  194.  Mr.  Sauerbeck's  'Mndex  Numbers"  are 
calculated  from  the  annual  average  wholesale  price  of  the 
following  forty-five  commodities: 


English  wheat 

Pig-iron 

Copper 

Flour 

American  wheat 

Iron  bars 

Tin 

Barley 

Prime  beef 

Java  sugar 

Lead 

Oats 

Middling  beef 

Coal  (London) 

Jute 

Maize 

Prime  mutton 

Coal  (export) 

Silk 

Potato^ 

Middling  mutton 

Wool  (Merino) 

Hides 

Rice 

Coffee  (two  sorts) 

Wool  (English) 

Leather 

Pork 

Tea  (two  sorts) 

Soda  crystals 

Tallow 

Bacon 

West  India  sugar 

Petroleum 

Seed  oil 

Butter 

Nitrate  of  soda 

Palm  oil 

Indigo 

Flax 

American  cotton 

Olive  oil 

Timber 

Hemp 

Indian  cotton 

Sec.   195.     The  basis  of  comparison  is  the  average 
annual  wholesale  price  of  the  forty-five  commodities  for 


no  BIMETALLISM 

the  eleven  years  1867-77  inclusive.  The  average  price 
is  represented  by  the  symbol  100;  and  variations  from 
this  figure  above  or  below  indicate  the  average  rise  or 
fall  above  or  below  the  average  price  of  the  eleven  years. 

Sec.  196.  The  eleven  years  1867-77  inclusive  include 
the  four  years  of  low  prices  succeding  the  panic  of  1866, 
the  three  years  of  rising  prices,  1871-73,  and  the  first 
four  years  of  the  great  fall  which  has  occurred  since  1873. 

Sec.  197.  The  purchasing  power  of  gold  and  the 
purchasing  power  of  silver  rated  at  their  commodity  or 
**  market  value"  compared  with  the  basis  or  symbol 
number,  100,  representing  the  average  price  for  the 
period  1867-77  is  shown  in  the  following  "index  numbers:" 

DEPRECIATION  OF    SILVER 


Year 

Forty-Five 

Purcliasing  Power 

Purchasing  Power 

Commodities 

of  Gold 

of  Silver 

1867-77 

100 

100 

100 

1870 

96 

104.6 

103.7 

1871 

100 

100.7 

99.7 

1872 

109 

91.7 

91 

1873 

111 

90 

88.7 

1874 

102 

98 

93.9 

1875 

96 

104 

97.2 

1876 

95 

105.2 

91.3 

1877 

94 

106.3 

96 

1878 

87 

115 

99.3 

1879 

83 

120.5 

104.4 

1880 

88 

113.6 

97.6 

1881 

85 

117.6 

100 

1882 

84 

119.2 

101.2 

1883 

82 

122 

101.3 

1884 

76 

131.5 

101.6 

1885 

72 

139 

111 

1886 

69 

145 

108 

1887 

68 

147 

107.7 

1888 

70 

142.8 

100.6 

1889 

72 

138.8 

98.9 

1890 

72 

138.8 

108.9 

1891 

72 

138.8 

102.9 

1892 

68 

147 

96 

1893 

68 

147 

85.7 

See  Joint  Standard,  page  84. 


GOLD  STANDARD  IN  ENGLAND  111 

Sec.  199.  Prices  reached  their  maximum  in  1873.  In 
that  year  the  average  price  of  the  forty-five  commodities 
was  eleven  one-hundredths  higher  than  the  average  of 
the  1867-77  prices.  As  compared  with  this  rise  in  prices, 
of  course,  the  purchasing  power  of  both  gold  and  silver 
declined  and  in  1873  the  purchasing  power  of  gold  as 
compared  with  the  higher  prices  then  prevailing  is  shown 
by  the  index  numbers  to  have  been  90  and  the  purchas- 
ing power  of  silver  to  have  been  88.7. 

Sec.  200.  The  decline  in  prices  in  1874  was  from  111 
to  102,  or  from  11  above  to  2  above,  and,  of  course,  there 
was  a  corresponding  rise  in  the  purchasing  power  of  both 
gold  and  silver.  From  that  time  until  the  close  of  the 
year  1893  gold  appreciated  in  purchasing  power  as  com- 
pared with  its  purchasing  power  in  1867-77.  It  appre- 
ciated from  100  to  147,  and,  as  compared  with  its 
purchasing  power  in  1873  it  had  appreciated  from  10 
below  to  47  above,  or  fifty-seven  one-hundredths,  or  63 
per  cent.  Silver  in  the  meantime  had  fallen  from  11  and 
three-tenths  below  to  14  and  three-tenths  below,  or  three 
one-hundredths,  or  3  per  cent.,  although  most  of  the  time 
it  had  been  above  the  100  mark,  and  never  below  the 
87.7  mark  at  which  it  stood  in  1873,  until  1893,  so  that 
prior  to  1893  silver  had  lost  none  of  its  purchasing  power 
as  measured  by  commodities,  and  prior  to  that  time  the 
divergence  between  the  metals  had  been  caused  solely  by 
an  appreciation  in  the  value  of  gold. 


CHAPTER  XV. 


INFLATION  OF  PRICES  FROM  BIMETALLISM. 

Sec.  201.  It  is  insisted  by  the  gold  standard  advocates 
that  bimetallism  would  lead  to  a  great  inflation  of  prices; 
that  such  inflation  would  unsettle  business;  that  it  would 
impair  the  obligation  of  contracts,  and  that  creditors  would 
be  wronged  and  defrauded  to  an  extent  equal  to  the 
advance  in  the  price  of  silver  bullion  that  would  ensue  on 
the  adoption  of  bimetallism.  They  also  insist  that  every- 
thing has  become  adjusted  to  the  gold  standard,  and  that 
it  would  be  in  violation  of  the  principles  of  honesty  and 
fair  dealing  to  go  back  to  the  regime  that  obtained  prior 
to  1873. 

Sec.  202.  Is  there  any  force  in  these  objections? 
Would  bimetallism  cause  an  inflation  in  prices?  If  it 
would  not,  then,  of  course,  all  the  other  objections  fall  to 
the  ground,  as  they  are  predicated  on  the  assumption 
that  bimetallism  would  cause  an  inflation  of  prices  and 
that  the  calamities  predicted  would  necessarily  follow 
such  an  inflation. 

Sec.  203.  We  have  already  seen  that  prices  are  regu- 
lated by  the  amount  of  money  available  for  use,  that  as 
the  volume  of  money  is  increased,  other  things  remaining 
the  same,  prices  will  rise,  and  as  the  volume  of  money  is 
diminished  prices  will  fall.  We  have  also  seen  that  all 
money  available  for  use,  which  is  commonly  accepted  in 
exchange  for  services   or  property  and  in   payment  of 


INFLATION  OF  PRICES  113 

debts,  whether  so  accepted  by  force  of  law  (that  is,  its 
legal  tender  property)  or  by  common  consent,  act  on 
prices,  and  that  it  all  acts  in  precisely  the  same  manner, 
whether  gold,  silver  or  paper,  and  whether  it  is  converti- 
ble or  inconvertible,  and  without  any  regard  whatever  to 
the  material  of  which  it  may  be  composed;  and  that  the 
assumption  that  only  standard  money  acts  on  prices  is 
fallacious  and  as  utterly  without  foundation  in  fact,  as  is 
the  assumption  promulgated  by  a  distinguished  gold 
standard  advocate  that  financial  crises  are  caused  by 
**  waves  of  heat  received  from  the  sun." 

Sec.  204.  The  only  question,  therefore,  to  be  consid- 
ered is:  Would  bimetallism  increase  the  amount  of  money 
available  for  use?  If  it  would,  and  if  the  increase  in  the 
volume  of  money  was  greater  than  the  increase  in  popu- 
lation and  business,  then  prices  would  rise,  but  if  it  did 
not  increase  the  volume  of  money  faster  than  population 
increased  and  new  business  developed  and  new  demands 
for  money  were  created,  prices  would  not  rise. 

Sec.  205.  The  Director  of  the  Mint  in  his  Annual 
Report  for  the  fiscal  year  ending  June  30,  1898,  on  pages 
48-49,  estimates  the  coined  silver  in  the  world  at  that  time 
(January  1,1898)  at  ^3,977,500,000.  Of  this  sum  he  es- 
timates that  $3,276,100,000  is  full  tender  money  and  1^701,- 
400,000  limited  tender  money.  Of  the  full  tender  silver 
money  he  estimates  that  $1,817,400,000  is  in  Asia,  $743,- 
200,000  in  Europe,  $561,500,000  in  the  United  States, 
and  $154,000,000  in  the  rest  of  the  world.  Of  the  limited 
tender  money  he  estimates  that  $570,200,000  is  in 
Europe,  $76,700,000  in  the  United  States,  and  $54,900,- 
000  in  the  rest  of  the  world.  (In  order  to  make  the  full 
tender  silver  money  in  the  United  States  amount  to  the 
sum  of  $561,500,000,  the  Treasury  Department  adds  to 
the  estimated  amount  of  silver  dollars  $99,548,611  worth 


114  BIMETALLISM 

of  silver  bullion  purchased  under  the  provisions  of  the 
Sherman  Act  and  still  remaining  uncoined.  Probably  no 
one  outside  of  the  Treasury  Department  would  even  sus- 
pect that  this  uncoined  silver  bullion  is  money,  much 
less  full  legal  tender  money;  yet  it  is  so  counted  and 
classified  by  the  Treasury  Department.  See  pages  42-43 
Report  of  Director  of  Mint,  1898;  also  page  156,  Report  of 
the  Secretary  of  the  Treasury,  1898. )  The  full  tender 
silver  money  of  Europe  and  the  United  States  is  now  cir- 
culating side  by  side  with  gold  coin,  and  is  discharging 
the  money  function  at  its  nominal  or  face  equally  as  well 
as  gold  coins.  The  European  full  tender  silver  money 
has  been  coined  at  the  ratio  of  about  ISj^  to  1,  or  at  the 
rate  of  about  $1.33  per  ounce;  the  full  tender  silver 
money  of  the  United  States  has  been  coined  at  the  ratio 
of  16  to  1,  or  at  the  rate  of  $1.29  per  ounce,  and  the 
limited  tender  silver  money  in  both  Europe  and  the  United 
States  has  been  coined  at  a  ratio  still  more  favorable  to 
silver. 

Sec.  206.  The  limited  tender  silver  money  in  both 
Europe  and  the  United  States  is  also  circulating  side  by 
side  with  gold  and  discharging  the  money  function  to  all 
intents  and  purposes  as  well  as  gold.  Twenty  silver  shil- 
lings in  England  are  just  as  valuable  for  monetary  pur- 
poses as  a  gold  sovereign.  Four  silver  five-franc  pieces 
in  France  will  buy  as  much  of  any  commodity  and  dis- 
charge as  much  indebtedness  as  a  gold  twenty-franc 
piece,  and  in  the  United  States  ten  silver  dollars,  or 
twenty  half-dollars,  are  as  valuable  as  money — will  buy 
as  much  commodity,  or  pay  as  much  debt,  as  a  gold 
eagle. 

Sec.  207.  The  silver  money  of  Europe  and  America  is 
today  discharging  the  money  function  at  its  nominal  or 
face  value  equally  as  well  as  gold,  and  it  is  the  sheerest 


INFLATION  OF  PRICES  115 

nonsense  to  say  that  bimetallism  would  increase  the 
efficiency  of  this  money,  as  a  factor  on  prices. 

Sec.  208.  The  ^1,817,000,000  in  silver  money  in 
Asia  is  all  or  nearly  all  the  money  they  have,  and  it  is  all 
in  circulation  and  discharging  the  money  function  at  a 
coinage  ratio  of  about  15  to  1,  or  at  the  rate  of  about  $1.37 
per  ounce.  The  only  difficulty  the  silver  standard  coun- 
tries of  Asia  have  is  in  settling  foreign  balances  in  their 
trade  with  gold  standard  countries,  and  this  is  simply  a 
matter  of  foreign  exchange,  which  is  not  a  monetary 
question  but  a  commercial  one,  as  foreign  balances  are 
never  settled  in  money.  When  the  precious  metals  are 
made  use  of  in  such  settlements,  as  they  sometimes  are, 
they  are  treated  as  bullion  and  not  as  money;  they  are 
weighed,  not  counted;  the  money  stamp  is  utterly 
ignored. 

Sec.  209.  Professor  Marshall,  in  his  examination 
before  the  Royal  Gold  and  SiWer  Commission,  in  answer 
to  Question  9,652,  said: 

"  I  do  not  think  there  is  any  evidence  that  bimetallism,  that  is, 
the  use  of  two  metals  instead  of  one,  in  every  country  in  the  world 
would  raise  prices  all  the  world  over  directly;  that  is,  not  in  gold 
and  silver  countries  taken  together.  Indirectly  it  might,  but  directly 
I  do  not  think  it  would,  because  I  think  that  all  the  gold  and  silver 
in  the  world  that  is  not  wanted  for  the  arts,  for  manufactures  or  for 
hoarding,  is  already  acting  as  currency,  and  I  do  not  think  its  effi- 
ciency would  be  increased  by  the  adoption  of  bimetallism.  If 
bimetallism  caused  larger  supplies  to  be  raised  from  the  mines,  that 
would  affect  prices.  If  it  caused  less  to  be  hoarded,  that  would 
affect  prices.  If  it  lead  to  a  silver  paper  being  issued  on  a  thin 
reserve  of  silver,  that  would  inflate  prices,  but  by  itself,  I  do  not  see 
that  it  would  affect  prices  the  world  over.  If,  however,  bimetallism 
took  the  particular  form  of  fixing  the  price  of  silver,  say  20  per  cent, 
higher  than  its  market  value  now,  I  should  then  expect  to  see  it 
raise  prices  some  10  per  cent,  perhaps  a  little  less,  in  gold^countries, 
and  lower  them  some  10  per  cent,  perhaps  a  little  more  in  silver 


116  BIMETALLISM 

countries,  leaving  tlie  average,  ail  tlie  world  over,  very  much  as  it 
was  before." 

Sec.  210.  I  confess  that  1  do  not  see  the  logic  of  the 
last  conclusion.  If  all  the  silver  money  in  the  world  is 
now  discharging  the  money  function  at  its  nominal  value, 
as  Professor  Marshall  says  it  is,  and  without  doubt  he  is 
correct  in  this,  I  cannot  see  how  raising  the  **  market 
price  of  silver,  say  20  per  cent,  higher  than  its  market 
value  now,"  would,  or  possibly  could,  have  any  effect  on 
the  purchasing  power  of  silver  money.  If  the  money 
coined  from  silver  bullion  passes  readily  at  its  nominal 
value,  it  is  a  matter  of  no  importance  to  those  who  use 
the  money — to  those  who  receive  silver  money  in 
exchange  for  commodities — whether  the  bullion  out  of 
which  the  money  is  coined  cost  $1.29  per  ounce,  or 
whether  it  cost  $0.50  per  ounce.  In  either  case  the 
money  value  would  be  the  same,  and  it  is  the  money 
value,  and  not  the  bullion  value,  that  acts  on  prices.  In 
answer  to  another  question  in  the  same  examination  Pro- 
fessor Marshall  said:  **I  believe  that  the  shillings  and 
the  one-half  crowns  in  circulation  have  just  the  same 
effect  upon  prices  that  they  would  have  if  they  were  a 
legal  tender.  I  believe  that  four  one-half  crowns  affect 
prices  in  precisely  the  same  way  that  a  half  sovereign 
does." 

Sec.  211.  At  the  time  the  above  observation  was 
made  by  Professor  Marshall  the  market  value  of  the  silver 
in  the  silver  half-crown  pieces  was  20  per  cent,  below  the 
nominal  values  of  the  coin,  and  yet  the  Professor  says, 
and  he  says  truly,  that  the  half-crown  pieces,  coined  out 
of  silver  that  is  at  a  discount  of  20  per  cent,  as  measured 
by  gold,  **  acton  prices  in  precisely  the  same  way  that  the 
half-sovereign  does."  If  increasing  the  market  value  of 
the  silver  20  per  cent,  would  increase  the  power  of  the 


INFLATION  OF  PRICES  117 

coin  as  a  factor  on  prices,  then  silver  would  become  a 
more  important  factor  on  prices  than  gold,  because  now, 
at  20  per  cent,  below  gold,  Professor  Marshall  says  it  is 
an  equal  factor  with  the  gold  sovereign.  It  is  only 
necessary  to  state  this  proposition  to  be  convinced  of  its 
absurdity.  If  the  "  market  "  price  of  silver  bullion  was 
increased  20  per  cent.,  or  50  per  cent.,  the  coin  would 
continue  to  act  on  prices,  so  long  as  it  discharges  the 
money  function,  in  precisely  the  same  manner  that  it  does 
now;  it  would  act  in  the  same  manner  and  with  the  same 
force  that  money  stamped  on  gold  or  on  paper  would  act  on 
prices.  The  idea  that  one  kind  of  money  acts  on  prices 
more  efficiently  than  another  kind  so  long  as  they  equally 
discharge  the  money  function  at  their  face  value  and  both 
are  received  without  objection  by  the  people,  is  too 
absurd  for  serious  consideration. 

Sec.  212.  The  only  way  that  bimetallism  could  inflate 
prices  would  be  by  causing  more  money  to  be  put  into 
circulation,  or  by  causing  less  to  be  hoarded,  or  by  check- 
ing the  export  of  bullion  to  the  Orient.  It  could  not 
inflate  prices  by  causing  more  silver  bullion  to  be  coined 
into  money,  unless  more  silver  bullion  is  produced,  for 
there  is  comparatively  little  silver  bullion  in  stock.  1  know 
of  no  statistician  that  estimates  the  silver  bullion  in  stock 
at  more  than  fifty  million  ounces,  and  it  is  not  usually 
estimated  at  more  than  twenty-five  million  ounces,  and 
many  estimates  are  much  lower  than  twenty-five  million 
ounces. 

Sec.  213.  In  July,  1895,  G.  H.  Gibson,  a  prominent 
New  York  stock  broker,  in  an  interview  published  July 
8,  1895,  in  the  Chicago  Post,  in  which  the  amount  of 
silver  bullion  in  stock  was  being  discussed,  said: 

"  I  talked  with  Sir  Hector  M.  Hay,  a  member  of  the  firm  doing 
the  largest  bullion  business  in  the  world.    In  reply  to  a  direct 


118  BIMETALLISM 

inquiry  as  to  how  much  bullion  he  regarded  as  existing  in  the 
markets  of  Europe,  he  stated  his  belief  that  the  visible  supply  of 
Europe  did  not  exceed  £3,000,000  sterling. 

"Sir  Charles  Freemantle,  the  Master  of  the  British  Mint  on 
Tower  Hill,  told  me,  five  years  ago,  that  there  was  no  stock  of 
silver  bullion  to  speak  of  in  Europe.  It  came  by  every  steamer  and 
went  away  by  every  steamer.  On  inquiry  of  one  of  the  highest 
statistical  authorities  in  London  the  fact  was  confirmed  that  despite 
the  demonetization  of  silver  by  all  the  great  nations,  the  use  of 
silver  in  the  arts  has  grown  so  wonderfully  that  there  is  a 
ridiculously  small  supply  in  the  market  at  any  time." 

Sec.  214.  In  June,  1899,  I  addressed  letters  of  inquiry 
to  a  number  of  prominent  economists  and  statisticians 
requesting  them  to  give  me  their  estimate  of  the  amount 
of  silver  bullion  now  in  stock  and  for  sale  in  all  the 
markets  of  the  world.  I  received  answers  from  most  of 
them,  and  their  estimates  are  given  in  the  following 
paragraphs: 

Sec.  215.  Hon.  A.  J.  Warner,  who  has  devoted  many 
years  to  the  study  of  the  money  question,  especially  to 
bimetallism,  wrote  as  follows: 

"  Some  years  ago  I  made  an  effort  to  ascertain  the  amount  of 
silver  bullion  then  held  in  stock,  but  found  it  very  difficult  to  obtain 
information  definite  enough  to  enable  me  to  determine  even  approxi- 
mately the  supply  on  hand.  I  came  to  the  conclusion,  however, 
that  no  very  large  stocks  were  anywhere  carried,  and  I  think  the 
same  is  true  now,  although  stocks  may  have  somewhat  increased 
since  1893,  but  for  the  most  part  silver  as  fast  as  produced  is  sold 
for  manufacturing  purposes  or  for  subsidiary  coinage,  or  is  shipped 
to  India  or  China." 

Sec.  216.  Hon.  Joseph  C.  Sibley,  a  lifelong  student 
of  the  money  question,  writes  as  follows: 

"  My  estimate  from  the  best  figures  I  have  been  able  to  gather 
during  a  few  years  past  is  that  there  are  practically  no  stocks  in 
Europe.  My  belief  is  that  no  authority  today  can  show  in  Europe 
and  America,  (outside  of  our  own  Government  stock),  ten  million 
ounces.     I  doubt  if  there  is  more  than  one-half  that  quantity." 


INFLATION  OF  PRICES  119 

Sec.  217.  Edward  Atkinson,  a  prominent  writer  and 
statistician,  and  one  of  the  most  radical  and  uncompromis- 
ing gold  standard  men  in  the  United  States,  says: 

"Sir  Hector  Hay  and  Sir  Charles  Freemantie  are  both  of 
authority.  Their  estimates  doubtless  refer  to  the  quantity  of 
bullion  on  the  market.  There  is  little  or  no  bullion  held  in  stock, 
and  there  has  been  none  for  a  long  time." 

Sec  218.  Maurice  L.  Muhleman,  of  the  United  States 
Sub-Treasury  at  New  York,  a  man  who  from  his  connec- 
tion with  the  Treasury  Department  must  be  presumed  to 
have  all  the  available  information  on  the  question,  and 
who,  being  an  uncompromising  gold  standard  advocate, 
could  not  be  suspected  of  minimizing  the  silver  bullion  in 
stock,  says: 

"  I  am  of  the  opinfon  that  the  statements  you  quote  relative  to  the 
available  supply  of  silver  bullion  in  the  world,  made  several  years 
ago,  are  substantially  correct  today.  There  is  no  considerable  stock 
of  silver  bullion  now  in  the  world  in  the  sense  that  you  mean; 
such  as,  for  example,  a  large  stock  of  any  commodity,  which  could 
be  '  flung  on  the  market.'  Where  does  it  go  to?  You  will  find  that 
in  addition  to  the  much  larger  industrial  use  of  silver,  the  product  is 
chiefly  sent  to  the  Far  East.  Thus  England,  in  1897,  exported  some 
$90,000,000  of  silver,  and  in  1898  over  $75,000,000,  chiefly  to  the 
East,  though  Russia  took  $33,000,000  in  1897  and  $10,000,000  in 
1898.  France  has  used  some  in  the  East  (Cochin  China)  and  in 
Madagascar  also ;  and  we  export  five  to  ten  millions  to  the  East." 

Sec  219.  Professor  Taussig,  author  of  the  **  Silver 
Situation  in  the  United  States,"  and  at  the  present  time 
professor  of  Political  Economy  in  Harvard  University,  an 
uncompromising  gold  standard  man,  writes  as  follows: 

"  I  confess,  I  do  not  know  what  may  be  the  stock  of  silver 
bullion  available  for  immediate  use.  The  Director  of  the  Mint 
would  doubtless  have  some  impression  on  this  matter.  But  the 
question  does  not  seem  to  me  a  very  material  one.  The  'flooding' 
of  the  country  with  silver  in  case  of  free  coinage,  never  seemed  to 
me  probable ;  while  yet  it  seemed  to  me  certain  that  we  should  be 


120  BIMETALLISM 

very  soon,  if  not  immediately  on  a  silver  basis,  and  that  the  conse- 
quence of  being  on  a  silver  basis  would  then  work  themselves  out, 
by  a  longer  or  shorter  process." 

Sec.  220.  Henry  G.  Miller,  author  of  a  valuable  book 
entitled  **  Chapters  on  Silver,"  and  a  large  contributor  to 
economic  literature  for  the  past  twenty-five  years,  says: 

"  Seventy-five  per  cent,  of  the  inhabitants  of  the  earth  transact 
all  their  business  with  silver  money  and  there  is  nowhere  a  stock  of 
silver  bullion  accumulated  and  held  for  sale.  All  of  it  goes  to  silver- 
using  countries  for  monetary  purposes." 

Sec.  221.  Geo.  H.  Shibley,  author  of  a  voluminous 
and  very  valuable  work  on  the  **  Money  Question,"  that 
in  itself,  is  conclusive  proof  that  he  is  an  indefatigable 
and  untiring  student  and  careful  investigator  not  only  of 
the  present  conditions  but  of  the  history  of  money,  says: 

"  It  is  my  opinion  that  there  is  no  considerable  amount  of  silver 
bullion  for  sale,  in  other  words  that  it  is  not  being  kept  back  for  a 
higher  market  but  is  being  offered  for  sale  as  rapidly  as  it  comes 
from  the  smelters." 

Sec.  222.  Charles  Gide,  author  of  a  standard  text 
book  on  Political  Economy,  a  work  written  in  French,  but 
translated  into  several  languages,  and  now  extensively  used 
as  a  text  book  in  many  of  the  leading  universities  of  the 
world;  at  the  present  time  professor  of  Political  Economy 
in  the  University  of  Montpellier,  France,  after  giving  a 
carefully  prepared  statement  of  the  silver  money  in 
France,  says:  **  I  do  not  believe  that  the  quantity  in 
bars  (ingots)  is  considerable,  but  I  have  no  figures  in  this 
respect." 

Sec.  222a.  Hon.  Charles  A.  Towne,  Chairman  of 
the  Silver  Republican  National  Committee  and  one  of  the 
best  informed  men  in  the  United  States  on  all  phases  of 
the  Silver  Question,  writes  as  follows: 


INFLATION  OF  PRICES  121 

"  I  have  not  at  hand  the  data  from  which  I  can  deduce  a 
reasonably  correct  conclusion  in  regard  to  the  'total  amount  of  silver 
bullion  now  for  sale  in  all  the  markets  of  the  world.'  My  judg- 
ment, however,  is  that  there  practically  is  no  stock  on  hand  at  all. 
I  have  been  in  the  habit  of  challenging  our  opponents  to  show  any 
stock  of  silver  in  existence,  of  any  serious  proportion,  with  which 
our  mints  could  be  'flooded'  in  case  of  the  re-establishment  of 
bimetallism,  and  nobody  has  undertaken  to  point  out  any  such 
hoard." 

SEC.  223.  Alfred  Marshall,  author  of  '*  The  Principles 
of  Economics,"  one  of  the  best  publications  on  Economics 
ever  published;  and  at  the  present  time  Professor  of 
Political  Economy  in  the  University  of  Cambridge, 
England,  writes  as  follows: 

"  I  am  sorry  to  say  that  I  am  not  an  authority  on  the  subject  on 
which  you  write.  I  understand  that  bullion  dealers  believe  that  the 
free  stock  of  silver  in  England  is  seldom  considerable.  One  of  them 
once  told  me  that  there  was  nothing  to  be  gained,  and  something  to 
be  lost,  by  holding  any  considerable  stock,  and  so  far  as  a  complete 
outsider  can  form  an  opinion  the  argument  seemed  reasonable 
to  me." 

Sec.  224.  Lord  Aldenham,  one  of  the  best  informed 
men  in  Europe  on  all  phases  of  the  money  question,  in 
his  examination  before  the  Indian  Currency  Committee, 
March  16,  1899,  in  answer  to  question  12,882,  said: 

"  You  must  remember  this:  All  the  silver  that  is  produced  is 
used.    There  are  no  stocks  anywhere." 

SEC.  225.  Before  writing  the  letters  to  which  the  fore- 
going paragraphs  are  replies,  I  made  a  careful  examination 
of  all  available  statistics,  and  arrived  at  the  conclusion  that 
there  could  not  possibly  be  in  all  the  markets  of  the 
world  to  exceed  fifty  million  ounces  of  silver  bullion,  and 
in  all  probability  there  was  not  to  exceed  one-half  of  that 
amount.  If,  however,  there  is  50,000,000  ounces  and  it 
should  all  be  coined  into  money  at  the  ratio  of  16  to  1,  or  at 


122  BIMETALLISM 

15 >^  to  1,  or  even  at  the  Asiatic  ratio  of  15  to  1,  it 
would  make  less  than  five  cents  per  capita  for  the  inhabi- 
tants of  the  earth,  and  such  an  addition  to  the  world's 
volume  of  money  certainly  would  not  inflate  prices. 

Sec.  226.  In  Chapter  XVIII ,  entitled,  ''  Bimetallism  in 
the  United  States,"  reasons  are  given  and  statistics  quoted 
which  I  think  conclusively  prove  that  the  amount  of  sih.er 
bullion  now  for  sale  is  very  small,  to  which  chapter  the 
reader  is  referred.  In  estimating  the  amount  of  silver 
bullion  for  sale,  the  bullion  held  by  the  United  States  and 
any  that  may  be  held  by  other  governments  is  excluded. 
Such  bullion  is  not  on  the  market  and  is  not  for  sale. 
There  is  certainly  no  danger  of  the  inflation  of  prices  from 
the  coinage  of  the  bullion  now  in  stock,  and  there  is  no 
probability  of  there  being  any  future  production  of  silver 
and  gold  more  than  sufficient  to  keep  pace  with  increasing 
population  and  increasing  demand  for  money.  It  will  be 
seen  from  the  foregoing  answers  that  some  of  my  corres- 
pondents assume  that  most  of  the  silver  bullion  produced 
since  1893  has  been  consumed  in  the  arts  or  shipped  to 
the  Orient.  In  this,  however,  they  are  mistaken.  The 
consumption  in  the  arts  and  for  mechanical  purposes,  and 
the  exports  to  the  Orient,  are  but  little,  if  any,  greater  in 
proportion  to  the  production  than  formerly.  It  will  be 
seen  by  reference  to  the  1898  Annual  Report  of  the  Direc- 
tor of  the  Mint,  page  266,  that  the  world's  coinage  of  silver 
money  has  been  constantly  and  rapidly  increasing  since 
1893.  The  world's  coinage  of  silver  in  1896  was  ^159,- 
539,927,  of  which  $106,400,408  was  coined  in  Europe  and 
America,  and  $53,139,519  was  coined  in  the  rest  of  the 
world.  The  coinage  of  silver  in  1897  was  $167,760,297, 
of  which  $98,444,204  was  coined  in  Europe  and  America, 
and  $69,316,093  was  coined  in  the  rest  of  the  world.  In 
1896  the  European  coinage  was  $56,752,279,  and  in  1897 


INFLATION  OF  PRICES  123 

it  was  1^56,841,157.  The  above  facts,  shown  in  the 
Report  of  the  Director  of  the  Mint  for  1898,  contradict 
the  assumption  that  the  silver  bullion  now  being  produced 
is  being  consumed  in  the  arts. 

Sec.  227.  That  the  demonetization  of  silver  has  been 
an  important  factor  in  the  depression  of  prices  is  unques- 
tionably true,  but  it  is  not  because  the  silver  that 
remained  in  circulation  ceased  to  act  on  prices,  nor 
because  it  acted  with  less  efficiency  than  formerly,  but 
because  silver  being  no  longer  primary  money  or  money 
of  final  redemption,  an  abnormal  demand  was  created  for 
gold  for  that  purpose,  which  caused  large  amounts  of  gold 
to  be  withdrawn  from  circulation  and  hoarded  in  reserves. 
More  than  ^1,000,000,000  in  gold  coin  is  now  held  out  of 
circulation  in  the  war  chests  of  a  few  of  the  leading 
nations  of  Europe  in  addition  to  the  amount  held  in 
reserve  in  1873.  This  reserve  while  so  held  out  of  cir- 
culation does  not  and  cannot  act  on  prices,  and  for  all 
practical  purposes  it  might  as  well  be  at  the  bottom  of 
the  ocean  as  to  be  where  it  is,  so  far  as  being  a  price- 
regulating  factor  is  concerned. 

Sec.  228.  Free  coinage  of  silver  would  allay,  to  some 
extent  at  least,  the  fear  of  a  money  famine,  and  would 
probably  cause  some  of  the  hoarded  gold  to  be  released 
and  put  into  circulation.  Again,  if  silver  had  free  access 
to  the  mint  at  the  old  ratio,  its  production  would  be 
stimulated,  more  silver  would  be  produced  and  added  to 
the  money  of  the  world,  and  this  new  money  would  tend 
to  stimulate  prices,  and  these  two  causes  acting  together 
—  the  gold  released  from  hoards,  and  the  new  silver 
produced  —  would  in  all  probability  check  a  further  fall  in 
prices  and  possibly  give  them  a  slight  upward  tendency. 
But  as  we  have  already  seen  (See  Chapter  VI.  on  Con- 
sumption of  the  Precious  Metals  in  the  Arts  and  Manu- 


124  BIMETALLISM' 

factures),  a  very  large  per  cent,  of  the  annual  production 
of  gold  is  being  consumed  in  the  arts  and  manufactures, 
and  hereafter  the  world  must  depend  very  largely  upon 
silver  for  its  supply  of  metallic  money. 

Sec.  229.  There  is  no  force  in  the  objection  to 
bimetallism  on  the  ground  that  it  would  inflate  prices. 
Bimetallism  would  not  and  could  not  inflate  prices.  The 
most  it  could  do  would  be  to  check  a  further  fall  and 
possibly  give  prices  a  slight  upward  tendency.  It  would 
be  impossible,  with  any  yield  from  the  mines,  at  all 
probable,  to  restore  the  prices  of  1873.  The  men  who 
make  these  objections,  if  they  have  investigated  the  facts, 
must  know  that  there  is  no  danger  of  inflation  from 
bimetallism.  The  entire  production  of  both  of  the 
precious  metals,  if  not  an  ounce  of  either  was  consumed 
for  non-monetary  purposes,  is  not  sufficient  to  keep  pace 
with  the  increasing  money  demand  of  the  world. 


CHAPTER  XVI. 


PARITY  OF  EXCHANGE. 

Sec.  230.  Can  a  parity  of  exchange  be  maintained 
between  gold-using  and  silver-  or  paper-using  countries? 
I  unhesitatingly  answer,  yes;  that  it  is  not  necessary  to 
have  gold  in  any  particular  country  in  order  to  maintain 
gold  prices  and  a  parity  of  exchange  in  such  country, 
but  only  necessary  to  limit  the  volume  of  money  so  as  to 
bring  the  total  sum  of  money  available  for  use,  in  such 
country,  within  the  amount  of  its  distributive  share  of  the 
world's  money  as  measured  by  its  population  and  busi- 
ness; and  that  this  fact  is  very  conclusively  shown  by 
the  report  of  the  Indian  Currency  Commission  of  1893. 
(See  page  35,  sec.  93-96,  Indian  Currency  Commission 
Report). 

It  is  there  shown  that  a  substantial  parity  of  exchange 
has  been  maintained  under  the  following  conditions: 

"  First— With  little  or  no  gold,  as  in  Scandinavia,  Holland  and 
Canada ; 

"  Second — Without  a  mint  or  gold  coinage,  as  in  Canada  and  the 
Dutch  East  Indies ; 

"  Third— With  a  circulation  consisting  partly  of  gold,  partly  of 
overvalued  and  inconvertible  silver  which  is  legal  tender  to  an 
unlimited  amount,  as  in  France  and  other  countries  of  the  Latin 
Union,  in  the  United  States,  and  also  in  Germany,  though  there 
the  proportion  of  overvalued  silver  is  more  limited,  the  mints  in  all 
these  countries  being  freely  open  to  gold,  but  not  to  silver,  and  in 
some  of  them  silver  coinage  having  ceased ; 


126  BIMETALLISM 

"Fourth — Witn  a  system  under  which  the  banks  part  with 
gold  freely  for  export,  as  in  Holland,  or  refuse  it  for  export,  as  in 
France. 

**  Fifth— With  mints  closed  against  the  private  coinage  of  both 
silver  and  gold,  and  with  a  currency  of  inconvertible  paper  as  has 
been  temporarily  the  case  in  Austria. 

"  Sixth — With  a  circulation  based  on  gold,  but  consisting  of  token 
silver,  which,  however,  is  legal  tender  to  an  unlimited  extent,  as  in 
the  West  Indies.        *       * 

"  It  would  thus  appear,"  is  the  conclusion  of  the  Commission, 
"that  it  has  been  found  possible  to  introduce  a  gold  standard  with- 
out a  gold  circulation  ;  without  a  large  stock  of  gold  currency ;  and 
even  without  legal  convertibility  of  an  existing  silver  currency 
into  gold." 

Sec.  231.  Professor  Nicholson,  commenting  upon  the 
above  facts  found  by  the  Commission,  and  the  conclusion 
deduced  therefrom,  in  his  "  Money  and  Monetary  Prob- 
lems," page  415,  says: 

"  It  is  to  be  regretted  that  the  Commission  did  not  emphasize  the 
fact  that  in  every  one  of  these  cases  the  same  general  principle  is 
exemplified,  the  principle,  namely,  of  limitation— first  definitely 
established  by  Ricardo.— ANY  KIND  OF  CURRENCY  CAN  BE 
MAINTAINED  AT  AN  ARTIFICIAL  VALUE,  PROVIDED  ONLY  THAT 
IT  IS  STRICTLY  LIMITED,  AND  THE  DEPRECIATION  (IF  ANY) 
WILL  DEPEND  UPON  THE  EXCESS  OF  ITS  QUANTITY,  although, 
of  course,  the  variation  is  not  one  of  simple  proportion." 

Sec.  232.  The  explanation  of  this  is  very  simple. 
The  essential  element  of  money  is  limitation,  and  where 
the  money,  no  matter  of  what  material,  is  kept  within  a 
limit  that  equals  the  distributive  share  of  the  world's 
money  of  the  nation  so  issuing  it,  its  value  will,  remain  at 
par  with  gold;  and  by  limiting  the  quantity,  if  made  an 
exclusive  legal  tender  in  such  country,  it  can  be  forced  to 
any  desired  premium  in  gold.  It  was  upon  this  principle 
that  the  inconvertible  paper  milreis  of  Brazil  commanded 
a  premium  of  five  per  cent,  in  foreign  gold  coin  and  upon 


PARITY  OF  EXCHANGE  127 

which  the  numerous  instances  cited  by  Ricardo  also 
depend.  It  was  upon  this  principle  and  by  the  force  of 
this  economic  law  that  the  inconvertible  notes  of  the  Bank 
of  England  commanded  a  premium  in  gold  coin  during  the 
years  1798, 1799  and  1800.  (See  Encyclopedia  Brittanica, 
Ninth  Edition,  Article  Banking,  Vol.  3,  page  320.)  It  will 
also  be  seen  from  the  above  historical  facts  that  there  is 
no  force  in  the  contention  so  persistently  urged  by  certain 
gold  standard  advocates,  that  to  maintain  a  parity  of 
exchange  between  gold-using  countries  and  silver-using 
countries,  or  even  to  maintain  bimetallism,  it  is  necessary 
to  exchange  gold  for  silver,  or  silver  for  gold,  on  the 
demand  or  request  of  any  person  or  of  any  government. 


CHAPTER  XVII. 


DEMONETIZATION. 

Sec.  233.  In  the  consideration  of  the  question  of  the 
demonetization  of  silver,  we  should  always  keep  in  mind 
the  motive  that  actuates  the  monometallist.  The  war 
being  waged  against  the  white  metal  is  not  because  of  the 
depreciation  of  silver,  or  because  there  is  any  difficulty 
in  maintaining  a  parity  between  the  two  metals,  nor  is  it 
because  silver  is  not  a  desirable  material  upon  which  to 
place  the  money  stamp,  but  because,  and  only  because, 
the  great  capitalists  of  the  world,  the  men  who  hold 
stocks,  bonds,  mortgages  and  other  evidences  of  indebted- 
ness to  the  amount  of  more  than  $200,000,000,000,  the 
men  who  have  fixed  incomes,  who  live  upon  the  wealth 
produced  by  others,  desire  to  make  money  dear  and  com- 
modities cheap;  because  they  want  to  crowd  more  wheat, 
more  pork,  more  cotton,  more  days'  work  into  the  dollar. 
It  makes  no  difference  to  them  whether  the  money 
destroyed  is  gold  or  silver,  but  they  insist  that  the  use  of 
one  of  the  precious  metals,  as  a  money  metal,  must  be 
discontinued,  and  the  one  which  for  the  time  being 
promises  to  be  the  most  abundant  is  the  one  they  make 
war  upon. 

Sec.  234.  Soon  after  the  gold  discoveries  in  California 
and  Australia,  and  when  it  was  generally  understood  that 
the  amount  of  new  gold  being  thrown  into  circulation 
would   necesarily    cause  a  rise  in  the  general  level  of 


DEMONETIZATION  129 

prices,  there  was  a  concerted  action  on  the  part  and  in 
behalf  of  the  money  kings  of  the  world  to  demonetize 
gold.  This  movement,  instigated  by  the  great  money 
syndicates  of  the  world,  was  advocated  by  such  able 
economists  as  De  Quincey  and  Chevalier,  and  under 
their  influence  and  advice  gold  was,  in  1857,  demonetized 
in  Germany,  Austria,  Holland,  and  in  some  other  States, 
and  the  demonetization  of  gold  would  in  all  probability 
have  become  general  had  it  not  been  for  the  determined 
opposition  of  France,  at  that  time  the  leading  coining 
nation  in  the  world.  Having  failed  to  secure  the  demone- 
tization of  gold,  and  the  production  of  silver  having 
largely  increased  some  twelve  or  fifteen  years  later,  and 
when  it  seemed  probable  that  silver  would  be  the  most 
abundant  of  the  two  metals,  the  opposition  to  gold  was 
abandoned,  and  the  forces  of  the  allied  money  kings  of 
the  world  were  directed  against  silver.  The  same  or  at 
least  similar  influences  that  secured  the  support  of  De 
Quincey  and  Chevalier  to  advocate  the  demonetization  of 
gold  in  1857,  were  able  to  secure  the  ardent  support  of 
such  pseudo-economists  as  Wells,  Atkinson,  Laughlin, 
Giffen,  McLeod  and  some  others,  none  of  whom,  however, 
appear  to  be  able  to  distinguish  between  money  and  a 
piece  of  metal,  or  as  Senator  Jones  says: 

"Dimly  seeing  the  'kindly  light'  and  fearing  to  follow,  are 
content  to  argue  in  a  circle  and  grope  in  darkness  compared  with 
which  midnight  may  be  called  noon.  Students  of  books  rather  than  of 
men — of  theories  rather  than  of  life — struck  with  awe  at  the  power 
of  wealth  and  the  glamour  of  privileges — they  either  pause  at  the 
very  threshold  of  discovery,  and  retrace  their  steps,  or  seeing  the 
truth  prefer  to  appear  ignorant  lest  they  give  offense  to  the 
mighty." 

Sec.  235.  The  Act  of  1873  which  struck  the  silver 
dollar  from  the  list  of  coins  in  the  United  States,  com- 

9 


130  BIMETALLISM 

monly  referred  to  as  the  Demonetization  Act,  did  not 
deprive  the  silver  dollars  already  coined  of  their  legal 
tender  property,  but  only  prohibited  their  further  coinage. 
Those  already  in  existence  were  not  actually  demone- 
tized until  the  following  year  on  the  compilation  of  the 
General  Statutes  by  which  their  full  legal  tender  property 
was  destroyed  and  they  were  allowed  to  be  used  as  a 
legal  tender  only  in  the  payment  of  debts,  like  the 
subsidiary  silver  coins,  in  sums  of  five  dollars  or  under. 

Sec.  236.  In  1878  the  legal  tender  property  of  the 
silver  dollar  was  partially  restored — that  is,  it  was  made 
a  legal  tender  in  the  payment  of  debt,  ''except  where 
otherwise  expressly  stipulated  in  the  contract." 

Sec.  237.  This  proviso  permits  any  person  who 
chooses  so  to  do  to  discriminate  against  silver  in  contracts 
for  the  payment  of  money.  While  the  act  of  1878  remo- 
netized  silver  so  far  as  payments  to  and  by  the  Govern- 
ment were  concerned,  made  silver  money  a  legal  tender 
when  not  otherwise  specified  in  the  contract,  and  provided 
for  the  coinage  of  a  certain  limited  amount  of  silver  each 
month  on  Government  account  from  silver  bullion 
purchased  by  the  Government  at  its  market  value,  it 
denied  it  access  to  the  mints  on  terms  of  equality  with 
gold;  it  permitted  banking  corporations,  trusts,  syndicates 
and  individuals,  in  any  and  all  contracts  executed  to 
them  for  the  payment  of  money,  to  stipulate  in  such  con- 
tracts that  payment  should  not  be  made  in  silver,  thus 
discriminating  against  silver  money  issued,  or  to  be 
issued,  by  the  Government.  It  delegated  to  corpora- 
tions and  to  individuals,  so  far  as  they  were  concerned, 
the  power  to  demonetize  silver  money.  And  every  Sec- 
retary of  the  Treasury  since  the  passage  of  this  law  has 
arbitrarily  surrendered  to  the  creditor  the  option,  expressly 
reserved  to  the  Government,  of  paying  in  silver  money, 


DEMONETIZATION  131 

and  in  all  cases  when  gold  has  been  demanded  by  the 
creditor  gold  has  been  paid.  Gold  has  been  paid  when 
the  treasury  was  overflowing  with  silver,  and  when 
interest-bearing  bonds  had  to  be  sold  to  obtain  gold  with 
which  to  make  such  payments  or  to  maintain  the  gold 
reserve.  With  such  a  law,  so  administered,  the  wonder 
is  not  that  silver  bullion  has  fallen  in  value  as  measured 
by  gold,  but  that  it  has  commanded  as  high  a  price  as  it 
has  commanded  or  that  silver  money  has  circulated  as 
money  at  all. 

Sec.  238.  It  has  been  charged  that  these  Acts,  the 
Act  of  1873  and  of  1874,  were  corruptly  passed  through 
both  houses  of  Congress.  Whether  British  gold  was 
used  to  corrupt  certain  members  of  Congress  is  not,  and 
probably  never  will  be,  positively  known.  But  certain 
it  is  that  not  to  exceed  half  a  dozen  members  of  Congress 
knew  at  the  time  of  the  passage  of  the  Act  of  1873,  that 
the  silver  dollar  was  stricken  from  the  list  of  coins,  and 
its  further  coinage  prohibited.  And  those  who  did  know 
it  said  nothing  about  it  in  public.  Certain  it  is  that 
when  President  Grant  signed  it  he  knew  nothing  about 
it.  Certain  it  is  that  the  people  had  never  petitioned 
Congress  for  any  such  legislation,  and  did  not  know  that 
there  had  been  any  such  until  nearly  two  years  after  the 
passage  of  the  act. 

Sec  239.  The  act  striking  down  the  silver  dollar  and 
prohibiting  its  further  coinage  was  the  most  important  and 
far-reaching  in  its  consequences  of  any  act  ever  passed 
by  Congress,  and  yet  no  paper  published  anywhere  in 
the  United  States,  at  or  near  the  time  of  its  passage,  con- 
tains any  reference  to  it  whatever. 

SEC.  240.  In  proof  of  the  fact  that  President  Grant 
did  not  know  that  the  act  of  1873  prevented  the  coinage 
of  the  silver  dollar,  I  quote  a  paragraph  from  a  letter  writ- 


132  BIMETALLISM 

ten  by  the  President,  October  3,  1873,  to  Mr.  Cowdry 
in  which  he  says: 

"  I  wonder  that  silver  is  not  already  coming  into  the  mint  to 
supply  the  deficiency  in  the  circulating  medium.  Experience  has 
proved  that  it  takes  about  $40,000,000  of  fractional  currency  to 
make  the  small  change  necessary  for  the  transaction  of  the  business 
of  the  country.  Silver  will  gradually  take  the  place  of  this  currency 
and  further,  will  become  the  standard  of  value  which  will  be  hoarded 
in  a  small  way.  I  estimate  that  this  will  consume  from  $200,000,000 
to  $300,000,000  of  this  species  of  our  circulating  medium.  I  confess 
to  a  desire  to  see  a  limited  hoarding  of  money.  BUT  I  WANT  TO 
SEE  A  HOARDING  OF  SOMETHING  THAT  IS  A  STANDARD  OF 
VALUE  THE  WORLD  OVER.  SILVER  IS  THIS.  Our  mines  are 
now  producing  almost  unlimited  amounts  of  silver,  and  it  is  becom- 
ing a  question,  'What  shall  we  do  with  it?'  I  suggest  here  a 
solution  which  will  answer  for  some  years,  to  put  it  in  circulation, 
keeping  it  there  until  it  is  fixed,  and  then  we  will  find  other 
markets." 

Sec.  241.  The  letter  from  which  the  above  quotation 
is  taken  was  written  by  President  Grant  nearly  eight 
months  after  he  had  approved  the  act  that  struck  the 
standard  silver  dollar  from  the  list  of  coins  and  had  made 
all  silver  coins  thereafter  coined  in  the  United  States 
a  limited  tender  for  five  dollars  only.  The  fact  that 
President  Grant  in  October,  1873,  said:  "  I  wonder  that 
silver  is  not  already  coming  into  the  mint  to  supply  the 
deficiency  in  the  circulating  medium,"  is  very  convincing 
evidence  that  he  did  not  know  that  the  act  of  February 
12,  1873,  had  stricken  the  standard  dollar,  the  only  full 
tender  silver  coin  we  had, —  from  the  list  of  coins, — had 
denied  it  access  to  the  mint  and  had  degraded  silver  gener- 
ally to  a  limited  tender  money.  And  the  further  fact  that 
after  estimating  that  from  ^200,000,000  to  ^300,000,000 
would  be  hoarded  by  the  people  he  should  write:  **  /  confess 
to  a  desire  to  see  a  limited  hoarding  of  money.  But  I  want 
to  see  a  hoarding  of  something  that  is  a  standard  of  value 


DEMONETIZATION  133 

the  world  over.  Silver  is  this,^*  is  conclusive  evidence  that 
he  did  not  know  that  silver  had  been  stricken  down, 
degraded,  made  subsidiary  to  gold  and  its  coinage  prohib- 
ited by  law. 

Sec.  242.  Professor  Walker,  one  of  the  delegates  from 
the  United  States  to  the  1878  International  Monetary 
Conference,  stated  that  the  people  of  the  United  States 
generally  knew  nothing  of  the  legislation  of  1873  that 
struck  the  silver  dollar  from  the  list  of  coins,  and  prohibited 
its  further  coinage,  until  long  after  the  passage  of  the  act, 
that  it  was  unknown  even  to  men  specially  occupied  with 
financial  and  monetary  subjects.  He  himself,  though  he 
had  at  the  time  been  lecturing  on  Money,  and  occupied  a 
chair  of  political  economy,  was  not  aware  of  what  was 
being  done,  and  he  presumed  the  great  majority  of  his 
fellow  citizens  were  equally  ignorant.  (See  Report  of 
Monetary  Conference,  1878,  page  25). 

Sec.  243.  In  further  proof  of  the  fact  that  the  act  demo- 
netizing silver  was  surreptitiously  passed  through  Con- 
gress, I  quote  from  page  165  and  following  pages  of  **  Our 
Money  Wars,"  by  Samuel  Leavitt,  a  valuable  book  pub- 
lished in  1895.     Mr.  Leavitt  says: 

"John  Sherman  seeks  to  create  the  impression,  [and  if  Mr. 
Leavitt  was  writing  today  he  might  add  the  name  of  John  Jay 
Knox]  that  the  demonetization  of  silver  was  well  understood  by  the 
Senators  and  Representatives  at  the  time  they  voted  for  it,  he 
justifies  his  vote  for  it,  and  yet  at  the  same  time  seems  quite  anxious 
to  divide  the  responsibility  with  others." 

Sec.  244.  "  Hon.  W.  D.  Kelley,  Chairman  of  the  Coinage 
Committee  of  the  House,  did  not  know  that  the  bill  demonetized 
silver,  though  he  reported  the  bill.  Garfield  did  not  know  it; 
Blaine  did  not  know  it.  They  were  both  members  of  the  House. 
Conkling  did  not  know  it.  So  these  gentlemen  asserted,  and  they 
were  certainly  as  truthful  as  Sherman. 

Sec.  245.  "  Sherman  in  his  opening  speech  of  the  late  campaign 
delivered  at  Paulding,  Ohio,  August  27,  1891,  in  regard  to  the  bill 


134  BIMETALLISM 

of  1873  demonetizing  silver,  said:  *  The  Act  of  1873  was  not  an  act 
of  the  party  then  in  power  but  it  was  an  act  of  ail  parties.  It  was 
voted  for  by  Democrats  and  Republicans  alil<e,  after  full  consider- 
ation for  three  years  in  Congress.  It  was  voted  for  by  every 
Representative  from  the  silver  States.' 

"Now  we  want  to  prove  Sherman  a  prevaricator.  From  the 
history  of  the  Act  of  1873,  and  the  act  of  1878,  we  copy  the  following: 
Judge  Kelley  of  Pennsylvania,  was  Chairman  of  the  Committee  on 
Coinage,  Weights  and  Measures  in  1872,  when  the  bill  originally 
passed  the  House.  This  is  what  he  said  on  the  floor  of  the  House, 
March  9, 1878: 

"  '  In  connection  with  the  charge  that  I  advocated  the  bill  which 
demonetized  the  standard  silver  dollar,  I  say  that,  though  the 
Chairman  of  the  Committee  on  Coinage,  I  was  as  ignorant  of  the 
fact  that  it  would  demonetize  the  silver  dollar,  or  of  its  dropping 
the  silver  dollar  from  our  system  of  coins  as  were  those  distin- 
guished Senators  —  Messrs.  Blaine  and  Voorhees,  who  were  then 
members  of  the  House  and  each  of  whom  a  few  days  since,  inter- 
rogated the  other:  '  Did  you  know  it  was  dropped  when  the  bill 
was  passed?'  *  No,' said  Mr.  Blaine,  '  did  you? '  'No,' said  Mr. 
Voorhees,  '  I  do  not  thinly  there  were  three  members  in  the  House 
that  knew  it.  I  doubt  whether  Mr.  Hooper,  who  in  my  absence 
from  the  Committee  on  Coinage,  and  attendance  on  the  Committee 
on  Ways  and  Means,  managed  the  bill,  knew  it.  I  say  this  in 
justice  to  him.'  (Congressional  Record,  Volume  7,  Part  2,  Forty- 
fifth  Congress,  second  session,  page  1605). 

Sec.  246.  "  Mr.  Holman  in  a  speech  delivered  in  the  House  of 
Representatives,  July  13,  1876,  said:  *  I  have  before  me  the  record 
of  the  proceedings  of  this  House  on  the  passage  of  that  measure,  a 
record  which  no  man  can  read  without  being  convinced  that  the 
measure  and  the  method  of  its  passage  through  the  House  was  a 
*  colossal  swindle.'  I  assert  that  the  measure  never  had  the  sanc- 
tion of  this  House  ,and  it  did  not  possess  the  moral  force  of  law.' 
(Congressional  Record,  Volume  4,  Part  6,  Forty-fourth  Congress, 
first  session.  Appendix,  page  193). 

"  Again  on  August  5, 1876,  he  said:  *  The  original  bill  was  sim- 
ply a  bill  to  organize  a  bureau  of  mines  and  coinage.  The  bill 
which  finally  passed  the  House  and  ultimately  became  a  law,  was 
certainly  not  read  in  this  House.  *  *  It  was  never  considered 
before  the  House  as  it  was  passed.    Up  to  the  time  the  bill  came 


DEMONETIZATION  135 

before  this  House  for  final  passage,  the  measure  had  simply  been 
one  to  establish  a  bureau  of  mines;  I  believe  I  use  the  term  correctly 
now.  It  came  from  the  Committee  on  Coinage,  Weights  and 
Measures.  The  substitute  which  finally  became  a  law,  was  never 
read,  and  it  is  subject  to  the  charge  made  against  it  by  the  gentle- 
man from  Missouri,  (Mr.  Bland),  that  it  was  passed  by  the  House 
without  a  knowledge  of  its  provisions,  especially  upon  that  of  coin- 
age. I,  myself,  asked  the  question  of  Mr.  Hooper,  who  stood  near 
where  I  am  now  standing,  whether  it  changed  the  law  in  regard  to 
coinage.  And  the  answer  of  Mr.  Hooper  certainly  left  the  impres- 
sion upon  the  whole  House  that  the  subject  of  the  coinage  was  not 
affected  by  that  bill.  (Congressional  Record,  Vol.  4,  Part  6,  Forty- 
fourth  Congress,  first  session,  page  5237). 

Sec.  247.  "  General  Garfield,  in  a  speech  made  at  Springfield, 
Ohio,  during  the  fall  of  1877,  said:  '  Perhaps  I  ought  to  be  ashamed  to 
say  so,  but  it  is  the  truth  to  say  that,  at  that  time  being  Chairman  of 
the  Committee  on  Appropriations,  and  having  my  hands  overfull 
during  all  that  time  with  work,  I  never  read  the  bill.  I  took  it  upon 
the  faith  of  a  prominent  Democrat  and  a  prominent  Republican,  and 
I  do  not  know  that  I  voted  at  all.  There  was  no  call  for  the  yeas 
and  nays,  and  nobody  opposed  that  bill  that  I  know  of.  It  was  put 
through  as  dozens  of  bills  are,  as  my  friend  and  I  know,  in  Congress 
on  the  faith  of  the  report  of  the  chairman  of  the  committee;  there- 
fore, I  tell  you,  because  it  is  the  truth,  that  I  have  no  knowledge 
about  it.' 

SEC.  248.  "  Senator  Allison,  on  February  15,  1878,  when  the  bill 
(H.  R.  1093)  to  authorize  the  free  coinage  of  the  silver  dollar  was 
under  consideration,  said:  '  But  when  the  secret  history  of  this  bill 
of  1873  comes  to  be  told  it  will  disclose  the  fact  that  the  House  of  Rep- 
resentatives intended  to  coin  both  gold  and  silver,  and  intended  to 
place  both  metals  upon  the  French  relation  instead  of  on  our  own, 
which  was  the  true  scientific  position  with  reference  to  this  subject 
in  1873,  but  that  the  bill  was  afterwards  DOCTORED,  if  I  must  use 
the  term,  and  I  use  it  in  no  offensive  sense,  of  course.' 

"  Mr.  Sargent  interrupted  him  and  asked  him  what  he  meant  by 
the  term  '  doctored.' 

"  Mr.  Allison  said:  '  I  said  I  used  the  word  in  no  offensive  sense. 
It  was  changed  after  discussion,  and  the  dollar  of  420  grains  was 
substituted  for  it.'  (Congressional  Record,  Vol.  7,  page  2,  Forty- 
fifth  Congress,  second  session,  page  1058). 


136  BIMETALLISM 

Sec.  249.  "On  February  IS,  1878,  during  the  consideration  of 
the  bill  above  referred  to,  the  following  colloquy  between  Senator 
Blaine  and  Senator  Voorhees  took  place: 

"  Mr.  Voorhees—'  I  want  to  ask  my  friend  from  Maine,  who  I  am 
glad  to  designate  in  that  way,  whether  I  may  call  him  as  one  more 
witness  to  the  fact  that  it  was  not  generally  known  whether  silver 
was  demonetized.  Did  he  know,  as  Speaker  of  the  House,  presiding 
at  that  time,  that  the  silver  dollar  was  demonetized  in  the  bill  to 
which  he  alluded?' 

"  Mr.  Blaine — '  1  did  not  know  anything  that  was  in  the  bill  at 
all.  As  1  have  before  said,  little  was  known  or  cared  on  the  subject. 
(Laughter.)  And  now  I  should  like  to  exchange  questions  with  the 
Senator  from  Indiana,  who  was  then  on  the  floor,  and  whose  busi- 
ness it  was  far  more  than  mine  to  know,  because  by  the  designation 
of  the  House  I  was  to  put  questions;  the  Senator  from  Indiana  then 
on  the  floor  of  the  House,  with  his  power  as  a  debater,  was  to 
unfold  them  to  the  House.    Did  he  know?' 

SEC.  250.  "  Mr.  Voorhees—'  I  very  frankly  say  that  I  did  not' 
(Ibid.,  page  1063). 

Sec.  251.  "  Senator  Beck  in  a  speech  made  in  the  Senate  Janu- 
ary 10,  1878,  said:  '  It  (the  bill  demonetizing  silver)  never  was 
understood  by  either  House  of  Congress.  I  say  that  with  full 
knowledge  of  the  facts.  No  newspaper  reporter— and  they  are  the 
most  vigilant  men  I  ever  saw  in  obtaining  information— discovered 
that  it  had  been  done.'  (Congressional  Record,  Volume  7,  Part  1, 
Forty-fifth  Congress,  second  session,  page  260). 

Sec.  252.  "  Mr.  Thurman  said:  *  I  cannot  say  what  took  place 
in  the  House,  but  I  know,  when  the  bill  was  pending  in  the  Senate, 
we  thought  it  was  simply  a  bill  to  reform  the  mint,  regulate  coinage 
and  fix  up  one  thing  and  another;  and  there  was  not  a  single  man 
in  the  Senate,  I  think,  unless  a  member  of  the  committee  from 
which  the  bill  came,  who  had  the  slightest  idea  that  it  was  even  a 
squint  toward  demonetization.'  "  (See  "  Our  Money  Wars,"  pp. 
164-168). 

Sec.  253.  In  view  of  all  these  facts  it  cannot  be  possi- 
ble that  it  was  generally  known  either  in  or  out  of  Con- 
gress, at  the  time  of  the  passage  of  the  act  of  1873  that 


DEMONETIZATION  137 

the  silver  dollar  was  by  that  act  stricken  from  the  list  of 
coins  and  its  further  coinage  prohibited;  and  any  man,  no 
matter  what  may  have  been  his  opportunities  for  knowing, 
and  no  matter  what  may  have  been  his  official  position  or 
his  connection  with  the  Treasury  Department,  or  with 
any  other  department  of  the  Government,  who  now 
claims  that  the  full  import  of  that  act  was  understood  and 
discussed  in  both  branches  of  Congress,  and  that  it  was 
the  intention  of  those  voting  for  the  act  of  1873  to  degrade 
silver  to  the  position  of  partial  legal  tender  money,  and  to 
prohibit  the  further  coinage  of  the  silver  dollar,  wilfully 
and  corruptly  misrepresents  the  facts.  It  is  not  possible 
for  him  to  be  mistaken  about  it.  I  am  well  aware  that 
this  is  very  strong  language  to  apply  to  men  who  have 
held  prominent  positions  in  the  councils  of  the  nation;  but 
it  has  been  the  misfortune  of  many  nations  to  have  been 
betrayed  by  those  who  have  been  trusted  by  the  people 
with  important  positions;  the  people  cannot  always  distin- 
guish between  the  worthy  and  the  unworthy  in  the 
selection  of  officers.  Even  one  of  the  twelve  disciples 
chosen  by  our  Saviour  proved  to  be  a  devil,  and  it  must 
be  expected  that  occasionally  a  Judas  will  insinuate  him- 
self into  the  councils  of  a  nation  and  not  only  betray  his 
trust,  but  also  make  himself  an  apologist  for  the  wrong 
deeds  of  his  co-conspirators. 

Sec.  254.  Senator  Jones,  in  a  speech  before  the  Inter- 
national Monetary  Conference,  1892,  page  262,  said: 

"  In  the  demonetization  of  silver,  a  wrong  unexampled  in  the 
history  of  time  was  committed  upon  civilization.  One-half  of  the 
metallic  money  of  the  world  was  at  a  blow  removed  from  accessi- 
bility to  debtors.  Debts,  enormous  in  number  and  amount,  had 
been  contracted  under  conditions  which  gave  the  debtors  a  right  to 
draw  for  means  of  payment  on  all  of  the  gold  and  silver  mines  of 
the   world.    Thenceforth   by    legislative   interference,  they  were 


138  BIMETALLISM 

deprived  of  their  option,  and  were  compelled  to  pay  in  gold  alone, 
which  was  becoming  yearly  less  and  less  capable  of  sustaining  the 
industry  of  the  world." 

He  also  said  (see  page  295):  "The  taking  from  either  or  any 
portion  of  either  [of  the  metals],  the  debt-paying  function,  without 
furnishing  some  equally  well  adapted  thing  to  perform  that  function 
in  its  stead,  was  a  step  of  the  most  baneful  import  to  society.  IF 
TAKEN  WITHOUT  FULL  APPRECIATION  OF  THE  RESULTS  THAT 
WERE  TO  FOLLOW,  IT  WAS  A  PIECE  OF  DELIRIOUS  FOLLY. 
IF  WITH  FULL  CONSCIOUSNESS  OF  THE  CONSEQUENCES,  IT 
WAS  — ON  THE  PART  OF  THE  CREDITOR  CLASSES  — NOTHING 
LESS  THAN  AN  ACT  OF  TREASON  AGAINST  THE  HUMAN  RACE." 

Sec.  255.  The  history  of  the  world  has  already 
established  beyond  the  possibility  of  a  doubt  that  a 
shrinking  volume  of  money  and  its  inevitable  accompani- 
ment, falling  prices,  blocks  the  wheels  of  industry,  dries 
up  the  springs  of  enterprise,  lessens  production,  relegates 
willing  workers  to  enforced  idleness  and  plunges  them 
into  debt — which  is  but  another  name  for  slavery — 
breeds  pestilence,  fosters  crime,  and  fills  our  jails,  alms- 
houses, and  lunatic  asylums.  Senator  Jones  does  not 
use  too  strong  language  when  he  characterizes  the 
demonetization  of  silver  as  "An  act  of  treason  against 
the  human  race." 

Sec.  256.  Professor  Walker,  in  an  address  delivered 
before  the  International  Monetary  Conference  of  1878, 
(see  pp.  74-78),  said: 

"  We  are  not,  therefore,  asking  this  body  to  decree  a  reversal  of 
a  law  of  nature  in  asking  the  consideration  of  the  expediency  of 
arresting,  and,  so  far  as  practicable,  reversing  the  movement  for  the 
demonetization  of  silver.  So  far  as  that  movement  has  proceeded, 
it  has  been  wholly  a  work  of  man's  accomplishing  as  it  was  of 
man's  devising.  The  action  of  Germany  in  1871  was  wholly 
gratuitous  and  of  choice,  not  compelled,  or  even  suggested,  by  any 
commercial,  industrial,  financial,  or  fiscal  stress  or  exigency. 


DEMONETIZATION  139 

"That  action  involving  important  changes  in  the  monetary 
policy  of  the  Scandinavian  kingdoms,  and  of  the  Latin  Union,  was, 
as  we  conceive,  taken  under  bad  advice,  with  partial  or  mistaken 
views  of  the  proper  relations  of  silver  to  the  trade  of  the  civilized 
nations,  in  their  present  state  of  development,  and  with  little  or  no 
consideration  of  the  broader  question,  as  to  the  effects  upon  the 
production  of  wealth  which  would  be  wrought  by  so  great  a 
diminution  of  the  Money  supply  of  the  world. 

"  As  the  Conference  of  1867,  wholly  absorbed  in  the  consideration 
of  the  means  of  securing  International  Coinage,  did  incontestibly 
exert  a  powerful  influence  in  initiating  the  movement  for  demone- 
tizing Silver,  it  remains  for  the  Conference  of  1878,  with  a  more 
sober  judgment  and  a  larger  view  of  human  interests,  instructed  as 
the  nations  have  been  by  the  bitter  experience  of  the  past  few 
years,  to  put  forth  its  hand  to  stay  the  progress  of  that  demone- 
tization which  has  already  brought  such  mischiefs  upon  trade  and 
the  production  of  wealth.  "'^  *  A  diminution  of  the  Money 
supply  is  one  of  the  gravest  evils  which  can  menace  mankind. 

"  The  mischiefs  of  a  contracting  circulation  have,  twice  at  least, 
in  the  course  of  events,  befallen  Europe  as  the  result  of  the 
exhaustion  of  the  mines  of  the  precious  metals,  or  the  interruption 
of  the  mining  industry  by  barbarian  invasion  or  civil  convulsion. 
IT  HAS  REMAINED  FOR  THIS  GENERATION  AND  THIS  DECADE 
TO  SEE  THESE  MISCHIEFS  BROUGHT  UPON  EUROPE  BY  THE 
DELIBERATE  ACTS  OF  GOVERNMENT  UNDER  THE  ADVICE  OF 
POLITICAL  ECONOMISTS. 

''Whether the  Money-supply  of  Europe  and  America  would  be 
reduced  by  the  completion  of  the  movement  initiated  in  1871,  to  the 
extent  of  40,  or  30,  or  of  only  20  per  cent.,  the  consequences  could 
not  but  be  most  disastrous. 

"SUFFOCATION,  STRANGULATION,  ARE  WORDS  HARDLY  TOO 
STRONG  TO  EXPRESS  THE  AGONY  OF  THE  INDUSTRIAL  BODY 
WHEN  EMBRACED  IN  THE  FATAL  COILS  OF  A  CONTRACTING 
MONEY-SUPPLY  I 

"  Against  so  great  a  wrong  to  civilization  and  to  the  hopes  of 
mankind,  the  representatives  of  the  United  States,  here  present, 
raise  their  earnest  protest  and  warning.  This  is  our  real  interest  in 
the  silver  question.    This  it  is  which  brings  us  here." 


140  BIMETALLISM 

Sec.  257.      Baron  Rothschild,  in  speaking  of  the  evil 
effect  that  would  ensue  if  demonetization  became  general, 
,  said: 

"  The  simultaneous  employment  of  the  two  metals  is  satisfactory 
and  gives  rise  to  no  complaint.  Whether  gold  or  silver  dominates 
for  the  time  being,  it  is  always  true  that  the  two  metals  concur 
together  in  forming  the  monetary  circulation  of  the  world,  and  it  is 
the  general  mass  of  the  two  metals  combined  which  serves  as  the 
measure  of  value  of  things.  The  suppression  of  silver  would 
amount  to  a  veritable  destruction  of  values  without  any  com- 
pensation." (Quoted  from  Senator  Jones'  May  (1890)  speech, 
page  18). 

Sec.  258.  Speaking  of  the  proposition  to  demonetize 
silver,  Senator  Dumas,  in  the  Senate  of  France,  March 
28,  1878,  said: 

"  Those  who  approach  these  questions  for  the  first  time  decide 
them  at  once.  Those  who  study  them  with  care  hesitate.  Those 
who  are  obliged  practically  to  decide,  doubt  and  stop  overwhelmed 
with  the  weight  of  the  enormous  responsibility."    (Id.  p.  17). 

Sec.  259.  Sir  Guilford  L.  Molesworth,  Delegate 
from  British  India,  to  the  International  Monetary  Con- 
ference of  1892,  in  a  speech  delivered  before  the  Con- 
ference and  reported  in  its  proceedings  on  page  138,  said: 

"  Our  predecessors  in  the  Paris  Monetary  Conferences  of  1878 
and  1881  were  almost  unanimous  in  the  opinion  that  silver  must  be 
rehabilitated.  They  only  disagreed  on  the  manner  of  rehabilitation. 
Some  were  of  the  opinion  that  matters  would  right  themselves, 
whilst  others  considered  that  the  remedy  could  only  come  by 
re-establishing  the  link  that  had  existed  between  gold  and  silver 
prior  to  1873. 

"The  opinion  of  the  latter  was  undoubtedly  correct.  Matters 
have  gone  on  from  bad  to  worse,  and  now,  we  are  confronted  by 
the  fact  that  Mr.  de  Rothschild,  the  most  renowned  financier  of  the 
world,  tells  us  that  if  this  Conference  were  to  break  up  without 
arriving  at  any  definite  result  there  would  be  a  depreciation  in  the 
value  of  silver  out  of  which  a  monetary  panic  would  ensue,  the  far- 
spreading  effects  of  which  it  would  be  frightful  to  contemplate. 


DEMONETIZATION  141 

"  Now  this  state  of  things  was  clearly  predicted  by  Ernest  Seyd 
in  1871,  when  the  severence  of  the  link  between  gold  and  silver  was 
first  contemplated.  His  prediction  has  been  so  remarkably  fulfilled 
that  I  must  quote  his  words: 

'  It  is  a  great  mistake,'  said  he,  'to  suppose  that  the  adoption  of  the  gold  valuation 
by  other  States  besides  England  will  be  beneficial.  It  will  only  lead  to  the  destruction 
of  the  monetary  equilibrium  hitherto  existing,  and  cause  a  fall  in  the  value  of  silver, 
from  which  England's  trade  and  the  Indian  silver  valuation  will  suffer  more  than  all 
other  interests,  grievous  as  the  general  decline  of  prosperity  all  over  the  world  will 
be.  The  strong  doctrinarianism  existing  in  England  as  regards  the  gold  valuation  is 
so  blind  that  when  the  time  of  depression  sets  in  there  will  be  this  special  feature; 
the  economical  authorities  of  the  country  will  refuse  to  listen  to  the  cause  here 
foreshadowed,  every  possible  attempt  will  be  made  to  prove  that  the  decline  of 
commerce  is  due  to  all  sorts  of  causes  and  irreconcilable  matters;  the  workman  and 
his  strikes  will  be  the  first  convenient  target,  then  speculation  and  over-trading  will 
have  their  turn.  *  *  Many  other  allegations  will  be  made,  totally  irrelevant 
to  the  real  issue,  but  satisfactory  to  the  moralizing  tendency  of  financial  writers.'  " 

Sec.  260.  Senator  Jones,  in  his  October  (1893) 
speech,  page  53,  said: 

"  The  question  is  not  whether  we  shall  have  a  white  or  a  yellow 
metal  upon  which  to  put  the  stamp  of  the  Government;  the 
question  really  is,  shall  we  have  a  quantity  of  money  that  will 
maintain  justice  between  debtor  and  creditor  in  the  matter  of 
deferred  payments— a  feature  not  only  of  great,  but  of  surpassing 
importance?  Mr.  President,  justice  is,  in  my  estimation,  much 
more  sacred  than  gold.  When  it  is  said  that  we  should  have  a 
dollar  that  will  be  at  parity  with  gold,  I  reply  that  we  might  better 
have  a  dollar  that  will  be  at  a  parity  with  the  products  of  the  labor 
of  our  people— at  a  parity  with  a  bushel  of  wheat  and  with  a  pound 
of  cotton.  What  I  wish  to  see  in  this  country  is  a  dollar  that  will 
be,  and  will  stay  at  a  parity  with  justice.  Gold  is  at  a  parity  with 
nothing,  but,  on  the  contrary,  is  at  a  disparity  with  everything." 


CHAPTER  XVIII. 


BIMETALLISM  IN  THE  UNITED  STATES. 

Sec.  261.  Can  the  United  States  coin  silver  into  full 
.egal  tender  money  at  the  ratio  of  16  to  1  without  an 
international  agreement?  There  never  was  an  interna- 
tional agreement  for  the  coinage  of  the  precious  metals  at 
a  certain  fixed  ratio,  and  yet  prior  to  1873  no  difficulty 
was  experienced  in  maintaining  the  relative  values  of  the 
two  metals,  at  or  near  the  coinage  ratio  of  the  principal  coin- 
ing nations.  Since  1873  a  great  divergence  between  the 
relative  values  of  the  two  metals  has  taken  place.  What 
has  caused  this  divergence? 

Sec.  262.  That  it  has  not  been  caused  by  a  difference 
in  the  relative  amounts  of  gold  and  silver  bullion  produced 
from  the  mines  since  1873  becomes  apparent  by  reference 
to  the  official  reports  of  the  production  of  the  precious 
metals.  (See  report  Secretary  of  the  Treasury,  1897, 
page  229).  The  value  of  the  gold  produced  1873  to 
1896,  both  inclusive,  (value  of  both  metals  computed  at 
the  ratio  of  16  to  1),  is  $2,929,688,100,  and  the  value  of 
the  silver  produced  during  the  same  period  is  $3,179,- 
345,600.  It  will  be  seen  from  this  official  report  that  the 
value  of  the  world's  output  of  silver  during  this  period  is 
but  very  little  more  than  that  of  the  gold. 

Sec.  263.  It  also  appears  from  the  same  report  that  the 
production  from  1860-1872  was,  gold  $1,628,252,000,  and 
silver,   $708,521,000 — less  than    one-half    as    much    in 


BIMETALLISM  IN  THE  UNITED  STATES  143 

value  of  silver  as  of  gold,  and  yet  the  metals  were  held 
comparatively  steady  at  the  French  coinage  ratio  of 
15>^  to  1.  From  1493  to  1850,  a  period  of  357  years, 
the  value  of  the  gold  produced  was  $3,314,550,000,  and 
of  the  silver,  $7,358,450,000,  more  than  twice  as  much 
in  value  of  silver  as  of  gold,  and  yet  the  relative  values 
of  the  two  metals  always  kept  within  the  limits  fixed 
by  the  coinage  or  mint  regulations  of  the  principal  coin- 
ing nations  of  the  world.  Over  long  periods  of  time  it 
has  frequently  happened  that  double  or  more  than  double 
in  value  of  first  one  and  then  the  other  of  the  metals  has 
been  produced,  sometimes,  in  fact,  for  many  years 
together  the  production  of  one  of  the  metals  almost 
entirely  ceased,  yet  these  enormous  fluctuations  in  the 
relative  production  of  the  metals  had  no  effect  on  their 
relative  value  for  monetary  purposes.  Since  1873  the 
value  of  the  gold  and  silver  produced — measured  by  the 
coinage  ratio — has  been  more  nearly  equal  than  at  any 
other  time,  and  yet  the  change  in  their  relative  com- 
mercial value  in-  the  twenty-five  years  since  1873  has 
been  five-fold  greater  than  in  the  380  years  preceding 
1873.  It  therefore  follows  that  it  could  not  have  been 
the  slight  excess  in  the  production  of  silver  since  1873 
that  has  caused  the  great  divergence  in  the  values  of 
gold  and  silver  bullion. 

Sec.  264.  In  view  of  these  facts  there  can  be  no 
question  that  the  controlling  influence  holding  the  metals 
together  ever  since  their  use  as  money  metals  was  the 
ratio  at  which  they  were  permitted  to  be  coined  into 
money.  They  were  chained  together  by  the  mint  ratio 
of  the  leading  coining  nations,  by  nations  that  were  able 
to  receive  and  did  receive,  coin  into  money,  and  float  as 
money,  all  the  silver  bullion  presented  at  their  mints  for 
coinage  purposes.     So  long  as  this  link  establishing  a 


144  BIMETALLISM 

legal  ratio  between  the  metals  for  coinage  purposes  was 
maintained,  and  equal  monetary  power  was  conferred  on 
the  coins  of  both,  it  was  impossible  for  the  metals  to  fall 
apart,  but  when  the  link  was  broken,  as  it  was  in  1873, 
they  fell  apart,  and  they  fell  apart  because  the  link  was 
broken,  and  for  no  other  reason. 

Sec.  265.  In  1873  and  since  that  time  several  import- 
ant nations  have  ceased  to  coin  silver  into  money  as  they 
had  previously  done.  Silver  has  been  denied  access  to 
their  mints  on  terms  of  equality  with  gold;  the  unlimited 
demand  for  silver,  at  a  fixed  ratio  with  gold  ceased  to 
exist;  in  other  words,  silver,  instead  of  being  a  money 
metal,  with  unlimited  mint  privileges  and  full  legal  tender 
power,  was  degraded  to  the  position  of  a  commodity,  and 
its  value  became  subject  to  the  law  of  supply  and  demand 
like  any  other  commodity,  while  to  gold  was  accorded 
unlimited  mint  privileges,  unlimited  demand  at  a  fixed 
price  —  measured  in  gold  —  and  unlimited  legal  tender 
power. 

Sec.  266.  This  discrimination  against  silver  and  in 
favor  of  gold  has  lessened  the  demand  for  silver  and 
increased  the  demand  for  gold;  the  lessened  demand  for 
silver  has  caused  its  value  to  fall  somewhat  in  the 
market,  while  the  increased  demand  for  gold  has  caused 
its  value  to  appreciate. 

Sec.  267.  Under  the  mint  laws  as  modified  in  and 
since  1873  gold  has  become  the  only  money  of  full  legal 
tender  power.  This  fact  has  caused  a  scramble  for  gold 
in  several  of  the  great  nations  for  national  reserves,  and, 
as  it  was  well  known  that  gold  was  rapidly  appreciating  in 
value,  many  of  the  great  banking  corporations  have  elected 
to  hold  their  reserves  in  gold.  We  have  already  seen  in 
another  Section  (see  Sec.  160)  that  more  than  one  thou- 
sand million  dollars  in  gold  coin  is  now  held  in  war  chests 


BIMETALLISM  IN  THE  UNITED  STATES  145 

and  in  national  and  bank  reserves,  in  excess  of  that  held 
in  1873.  This  abnormal  demand  for  gold,  resulting  solely 
from  legislation,  has  nearly  doubled  the  value  or  purchas- 
ing power  of  gold  within  the  past  twenty -five  years,  and 
from  this  enormous  appreciation  of  gold  and  from  a  slight 
depreciation  of  silver  the  commercial  ratio  between  the 
metals  has  changed  from  1S%  to  1  as  it  was  in  1873  to 
about  34  to  1  in  1899. 

Sec.  268.  Prior  to  1873  both  gold  and  silver  had  free 
access  to  the  mints  as  money  metals  of  unlimited  tender 
power  at  ratios  in  most  countries  ranging  from  15  to  1  to 
16  to  1.  Such  coinage  privileges  accorded  to  both  metals 
held  their  value  comparatively  steady  at  the  mint  price. 
From  the  time  of  the  adoption  of  individual,  or  free,  coin- 
age in  the  principal  States  of  Europe  and  America  until 
1873,  when  free  coinage  was  denied  to  silver,  there  was 
no  such  thing  as  a**  market  value  "  for  either  gold  or 
silver  bullion. 

Sec.  269.  Between  1666  and  1873  the  value  of  bullion 
of  either  of  the  metals  was  the  result  of  competition 
between  the  mints  of  the  principal  coining  nations.  The 
price  never  rose  above  the  highest  price  paid  for  it  at 
any  important  mint  unless  influenced  by  pressing  local 
demands  for  other  than  monetary  purposes,  and  then 
only  slightly  above,  and  for  a  short  time  only,  and  never 
fell  below  the  price  paid  for  it  at  any  important  mint  to 
exceed  an  amount  equal  to  the  incidental  expenses,  mint 
charges  and  cost  of  transportation  to  the  coining  mint. 
In  other  words:  **  Nobody  gave  more  nor  less  in  one 
metal  for  the  other  than  the  mints  gave,  and  the  mints 
gave  whatever  the  law  directed.  The  so-called  *  market 
value  '  of  this  period  was  simply  what  may  be  termed  an 
international  mint  ratio."  (See  Monetary  Systems, 
page  64). 


10 


146  BIMETALLISM 

Sec.  270.  Since  1873,  silver  being  denied  access  to 
the  mints,  and  being  coined  only  for  the  Government, 
and  out  of  bullion  purchased  by  the  Government,  there 
has  arisen  for  the  first  time  since  the  establishment  of 
free  coinage  a  general  **  market  value  "  of  silver  entirely 
distinct  from  its  coinage  or  mint  ratio. 

Sec.  271.  It  being  apparent  that  the  link  that  held 
the  metals  together  prior  to  1873  was  the  right  of  access 
to  the  mints  on  equal  terms  and  the  conferring  of  equal 
monetary  power  on  each  of  the  metals  when  coined  at  the 
mint  ratio,  it  follows  that  any  force  that  is  sufficient  to  re- 
establish the  broken  link  can  restore  the  former  relative 
value  of  the  metals.  No  international  agreement  for  a 
coinage  ratio  ever  existed,  and  yet,  prior  to  1873,  there 
was  no  serious  fluctuation  in  the  relative  value  of  the 
metals.  They  were  held  together  by  the  law  that  gave 
them  equal  mint  privileges  and  equal  monetary  power. 

Sec.  272.  What  has  been  done  can  be  done  again.  As 
France  from  1803  to  1873  held  the  value  of  the  precious 
metals  comparatively  steady  by  simply  keeping  her  mints 
open  on  equal  terms  to  both  metals,  so  any  nation  that  is 
able  to  receive,  coin,  and  float  as  money  all  the  silver 
bullion  that  is  presented  at  its  mints  for  coinage  purposes 
and  that  will  keep  its  mints  open  at  all  times  for  the 
reception  of  gold  and  silver  on  equal  terms  and  make  the 
coins  of  both  an  equal  tender  for  all  purposes,  can  restore 
the  broken  link;  and  that  restored,  the  value  of  silver  will 
re-assert  itself. 

Sec.  273.  Notwithstanding  the  adverse  silver  legisla- 
tion there  is  still  being  coined  a  large  amount  of  silver. 
On  the  closure  of  the  Indian  mint  and  the  repeal  of  the 
purchasing  clause  of  the  Sherman  Act,  both  of  which 
events  occurred  in  1893,  the  annual  coinage  of  silver  fell 
off,  and  for  the  first  time  silver  fell  in  value — as  measured 


BIMETALLISM  IN  THE  UNITED  STATES  147 

by  commodities — below  its  value  or  purchasing  power  in 
1873. 

Sec.  274.  The  world's  coinage  of  silver  for  1894  and 
since  that  time  has  been  as  follows:  (See  Reports  of 
Director  of  the  Mint,  1897,  page  54,  and  for  1898,  page 
266). 

1894 $113,095,788 

1895 126,873,642 

1896 159,540,027 

1897 167,760,297 

Sec.  275.  The  coinage  for  the  years  1896  and  1897, 
after  making  allowance  for  the  silver  consumed  in  the 
arts  and  manufactures,  virtually  consumed  all  the  silver 
produced  in  those  years,  and  this  confirms  the  estimates 
of  statisticians  that  there  is  but  very  little  silver  bullion 
now  in  stock,  certainly  not  to  exceed  50,000,000  ounces, 
outside  of  that  held  by  the  various  governments,  that  is 
to  say,  there  is  not  to  exceed  50,000,000  ounces  (probably 
not  half  that  amount)  of  silver  bullion  now  for  sale  in  all 
the  markets  of  the  world.  It  will  also  be  seen  that  there 
is  now  a  constantly  and  rapidly  increasing  demand  for 
silver  for  coinage  purposes. 

Sec.  276.  The  world's  demand  for  money  is  more 
than  sufficient  to  absorb  all  the  gold  and  silver  produced. 
The  mint  ratio  of  the  great  coining  nations  of  the  world  in 
force  prior  to  1873  fixed  the  relative  value  of  gold  and 
silver,  and  created  an  unlimited  demand  for  the  entire 
output  at  the  ratio  fixed.  As  long  as  this  unlimited 
demand  existed  it  was  impossible  for  either  of  the  metals 
to  fall  in  value  below  its  coinage  ratio  because  the  mint 
stood  ready  to  receive  and  coin  into  money  at  the  mint 
ratio  any  surplus  of  either  of  the  metals  that  might  remain 
after  the  demand  for  use  in  the  arts  and  manufactures 
had  been  satisfied.     Since  1873,  however,  silver  has  been 


148  BIMETALLISM 

denied  access  to  the  mints  on  terms  of  equality  with  gold, 
the  unlimited  demand  for  silver  has  ceased,  no  important 
commercial  nation  is  now  coining  silver  on  private 
account;  the  silver  now  being  coined  is  from  bullion  pur- 
chased by  governments  at  its  "  market  value."  Although 
the  mints  remain  open  at  a  fixed  price  to  all  the  gold  pre- 
sented they  are  closed  to  silver.  In  other  words,  silver 
has  ceased  to  be  a  money  metal — in  the  strict  sense  of  the 
term — and  is  now  simply  a  commodity  and  is  subject  to 
all  the  fluctuations  in  value  arising  from  supply  and 
demand  like  any  other  commodity. 

Sec.  277.  The  source  from  which  the  precious  metals 
derive  the  greater  part  of  their  value  is  their  use  as 
money.  If  their  use  as  money  should  be  discontinued  by 
all  nations  they  would  unquestionably  lose  much  of  their 
present  value,  probably  three-fourths,  possibly  much  more 
than  three-fourths.  The  fall  in  the  value  of  silver  caused 
by  its  partial  demonetization  conclusively  proves  this  to  be  a 
fact.  There  can  be  no  doubt  that  denying  to  silver  access 
to  the  mints  on  terms  of  equality  with  gold,  although  a 
large  amount  of  silver  is  still  being  coined  into  money 
from  bullion  purchased  by  the  various  governments  at  its 
**  market  "  value,  has  reduced  the  value  of  silver  one-half 
as  measured  by  gold,  which  is  still  a  money  metal,  and  if 
its  coinage  should  be  entirely  discontinued  it  would  lose 
one-half  or  two-thirds,  possibly  three-fourths,  of  its 
present  value. 

Sec.  278.  If  the  United  States  should  restore  to  silver 
unlimited  mint  [privileges  at  the  ratio  of  16  to  1,  and 
make  the  silver  when  coined  a  full  legal  tender  for  all 
purposes,  silver  bullion  would  immediately  become  worth, 
at  least  in  this  country,  ;^1.29  per  ounce.  An  ounce  of 
silver  coined  at  the  ratio  of  16  to  1  will  coin  out  ;^1.29, 
and  if  the  coinage  is  unlimited  and  gratuitous,  an  ounce 


BIMETALLISM  IN  THE  UNITED  STATES  149 

of  silver  uncoined  would  be  of  the  same  value  as  an  ounce 
of  silver  coin,  and  nobody  would  sell  it  for  less  than  its 
coinage  value.  If  the  coinage  was  free  and  unlimited, 
but  subject  to  a  seigniorage  charge  for  coinage,  then  an 
ounce  of  silver  bullion  would  be  worth  an  ounce  of  coined 
money  less  the  charge  for  coinage. 

Sec.  279.  Can  the  United  States  without  interna- 
tional agreement  establish  a  ratio  of  16  to  1  between  gold 
and  silver  bullion,  and  by  so  doing  raise  the  price  of  silver 
bullion  to  ^1.29  per  ounce  and  hold  it  comparatively 
steady  in  all  the  markets  of  the  world?  If  this  country 
can  receive,  coin,  and  float  as  money,  all  the  silver 
bullion  that  will  under  such  ratio  be  presented  to  our 
mints  for  coinage  purposes,  and  if  it  makes  the  silver, 
when  so  coined,  a  legal  tender  for  all  purposes,  and  repeals 
all  laws  permitting  silver  to  be  discriminated  against  in 
private  contracts,  then  we  can  maintain  the  value  of  the 
coin  at  its  coinage  ratio.  If,  however,  we  cannot  coin 
and  float  as  money  all  the  bullion  presented  for  coinage, 
or  if  we  allow  silver  to  be  treated  as  inferior  to  gold  by 
any  person  who  may  desire  to  discriminate  in  favor  of 
gold,  or  if  we  make  our  silver  money  a  partial  legal 
tender  only,  if  we  deny  it  access  to  the  mint  on  equal 
terms  with  gold,  in  other  words,  if  we  purposely  degrade 
our  silver  money  by  legislation,  then,  of  course,  its 
value  cannot  be  maintained. 

SEC.  280.  Can  we  receive,  coin  and  float  as  money 
all  the  silver  that  will  be  presented  at  our  mints  for 
coinage.?  We  have  already  seen  that  there  is  not  to 
exceed  50,000,000  ounces  of  surplus  silver  bullion  for 
sale,  and  no  one  will  question  the  fact  that  this  country 
could  very  easily  absorb  that  amount  with  great  advan- 
tage to  the  business  interest  of  the  country.  It  therefore 
follows  that,  unless  silver  now  in  coin  and  in  circulation 


150  BIMETALLISM 

as  money  in  other  countries  should  be  sent  here  for  sale, 
there  would  be  no  difficulty  in  maintaining  a  ratio  of  16 
to  1.  Is  there  any  probability  of  coined  silver  now 
circulating  as  money  in  other  countries  being  sent  here 
for  recoinage? 

Sec.  281.  The  Director  of  the  United  States  Mint  in 
his  Annual  1897  Report  (see  Finance  Report,  1897,  page 
216),  estimates  the  silver  money  in  the  world  at 
$4,268,300,000,  which  he  locates  as  follows: 

In  the  United  States $   634,500,000 

In  Europe 1,216,900,000 

In  Asia 2,229,400,000 

In  America  exclusive  of  the  United  States 170,900,000 

In  Africa,  Australasia  and  all  other  countries 16,600,000 

$4,268,300,000 

Sec.  282.  There  is  not  a  commercial  country  today 
in  the  world  that  is  not  reaching  out  for  more  silver  for 
coinage  purposes,   and  there  are   but  two    countries — 


Note. —  The  above  figures  were  taken  from  the  1897  annual  report  of  the 
Director  of  the  Mint,  which  was  the  latest  published  report  when  this  chapter  was 
written.  In  the  1898  annual  report,  since  published,  notwithstanding  the  fact  that  the 
silver  coinage  for  the  year  1897  was  $167,760,297,  the  Director  of  the  Mint  for  reasons 
no  doubt  satisfactory  to  himself,  but  which  he  does  not  explain,  reduces  his  estimate 
on  the  total  amount  of  silver  coin  from  $4,268,300,000  in  1897,  to  $3,977,500,000  in 
1898— a  reduction  of  $290,000,000,  to  which,  if  you  add  the  coinage  of  1897,  $167,000,000, 
makes  a  total  deduction  of  $457,000,000.  In  1897,  he  estimates  the  silver  coin  in  Asia 
at  $2,229,400,000,  and  in  1898  he  estimates  it  at  $1,817,400,000,  a  reduction  of 
$412,000,000  in  a  single  year,  notwithstanding  the  fact  that  there  was  a  large  silver 
coinage  in  Asia  during  that  year.  When  I  received  the  1898  annual  report  and 
noted  the  great  discrepancy  between  it  and  the  report  for  the  former  year,  I  determined 
to  re-write  this  chapter,  but  on  further  examination  of  the  reports  issued  from  the 
Treasury  Department,  I  found  that  the  reports  of  no  two  years  agree  and  that 
estimates  based  on  the  statements  contained  in  any  one  of  the  reports  would  not 
agree  with  estimates  based  on  statements  contained  in  any  other  report,  and  con- 
cluded that  I  might  as  well  let  the  chapter  remain  as  it  had  been  written,  because 
If  re-written  and  based  on  the  estimates  contained  in  the  1898  report,  it  would  be  no 
more  likely  to  agree  with  the  1899  estimates  of  the  Department  than  would  the 
estimates  of  1897. 

The  estimates  of  the  Treasury  Department  in  regard  to  gold  are  subject  to  as 
serious  and  unaccountable  fluctuations  as  those  in  regard  to  silver.     For  example, 


BIMETALLISM  IN  THE  UNITED  STATES  151 

Mexico  and  Japan — which  coin  silver  at  a  lower  ratio  to 
gold  than  16  to  1.  And,  consequently,  there  are  no 
countries  except  Mexico  and  Japan  that  could  send  their 
silver  coins  to  this  country  under  a  ratio  of  16  to  1  with- 
out sustaining  a  loss  on  the  face  value  of  their  coins. 
(See  Annual  1898  Report  of  the  Director  of  the  Mint, 
page  48). 

Sec.  283.  The  full  tender  silver  money  in  Europe  is 
coined  at  a  ratio  of  15^  to  1,  and  their  subsidiary  silver 
money  is  coined  at  a  ratio  much  more  favorable  to  silver, 
all  of  it  at  ratios  below  15  to  1,  and  some  of  it — that  of 
Russia,  Germany  and  Austria — at  ratios  below  14  to  1. 
None  of  this  European  silver  coin  could  be  sent  to  this 
country  at  our  proposed  ratio  of  16  to  1  without  a  loss  to 
the  shipper,  on  the  face  value  of  the  coin,  of  at  least  3 
per  cent.,  besides  cost  of  transportation,  and  none  of  it 
can  be  spared  from  the  stock  of  money  of  the  several 
countries  where  it  is  now  circulating  side  by  side  with 


the  1897  report  estimates  the  stock  of  gold  in  Great  Britain  at  $584,000,000.  The  1898 
report  shows  the  gold  coinage  of  Great  Britain  during  the  year  to  have  been  $8,654,764 
(see  p.  48),  and  the  excess  of  imports  of  gold  into  Great  Britain  over  exports  of  same 
to  have  been  $677,509.  (See  1898  Report,  p.  132).  If  the  estimate  of  1897  of 
$584,000,000  was  based  on  gold  coins,  then  the  coinage  of  gold  during  the  year,  less 
excess  of  exports,  if  any,  should  be  added  to  find  the  amount  on  the  first  of  January, 
1898.  If,  however,  the  estimate  included  both  coin  and  bullion,  which  is  probably  the 
case,  then  the  excess  of  imports  over  exports  of  gold  during  the  year  should  be  added 
to  the  stock  on  hand  in  1897.  In  either  case  there  would  be  an  increase  in  the  stock  of 
gold,  and  not  a  decrease  of  $146,000,0000  as  estimated  by  the  Treasury  Department. 

Del  Mar  in  the  second  edition  of  the  "  Science  of  Money,"  page  192,  in  speaking 
of  the  reports  published  by  the  Director  of  the  Mint  and  the  Comptroller  of  the 
Currency  says: 

"  The  Government  of  the  United  States  is  now  so  strong  and  rich  that,  in  the 
scramble  of  nations  for  the  world's  scant  stock  of  the  precious  metals,. it  probably  has 
the  power  to  secure  more  than  its  due  share.  In  other  words,  the  great  European 
syndicates  should  no  longer  be  permitted  to  monopolize  the  flow  of  the  precious 
metals.  With  an  independent  policy,  the  Treasury  and  Banks  of  the  United  States 
are  capable  of  exerting  an  important  influence  upon  this  movement.  It  ill-becomes  the 
possessor  of  such  power  to  permit  the  employment  of  the  feeble  and  juggling  tables 
of  'coins  in  circulation'  published  by  the  Dire  tor  of  the  Mint  and  the  Comptroller  of 
the  Currency." 


152  BIMETALLISM 

gold  and  discharging  the  money  function  at  its  nominal  or 
face  value  equally  as  well  as  gold.  The  demand  in 
Europe  is  for  more  silver  money.  The  coinage  of  silver 
in  Europe  for  the  year  1896 — the  last  year  for  which  we 
have  official  reports — (see  United  States  1897  Finance 
Report,  page  309),  was  ;^56, 750,000.*  Does  the  coinage 
of  $56,750,000  of  silver  money  in  Europe,  in  a  single 
year,  indicate  that  Europe  has  more  silver  money  than 
she  can  use  to  advantage?  Does  it  indicate  that  Europe 
would  be  glad  of  an  opportunity  to  get  rid  of  her  silver 
money,  and  that  if  the  United  States  should  go  to  free 
coinage  she  would  dump  her  silver  money  on  us?  Such 
a  claim  is  too  absurd  for  serious  consideration.  Free 
coinage  in  the  United  States,  resulting  as  it  would  in 
raising  the  value  of  silver  bullion,  not  only  in  the  United 
States  but  also  in  Europe  and  all  over  the  world,  would 
not  attract  silver  from  Europe  to  this  country,  but,  on 
the  contrary,  would  increase  the  European  demand  for 
silver. 

Sec.  284.  The  only  reason  there  is  not  even  now  a 
greater  demand  in  Europe  for  silver  for  coinage  purposes 
is  the  fear  of  a  further  fall  in  the  gold  price  of  silver.  If 
the  United  States  should  restore  to  silver  the  right  of  free 
and  unlimited  coinage  at  a  ratio  of  16  to  1,  no  fear  of  a 
decline  in  the  value  of  silver  would  any  longer  be  enter- 
tained by  any  sane  man.  Europe,  with  her  more  than 
four  hundred  million  people,  nine  tenths  of  whom 
handle  no  money  but  silver  money,  requires  a  much 
larger  volume  of  silver  money  than  she  now  has,  and 
when  she  is  assured,  as  she  would  be  by  a  bimetallic  law 
in  the  United  States,  that  the  value  of  silver  will  here- 


*  The  silver  coinage  In  Europe  in  1897,  as  shown  by  1898  Report  of  the  Director 
of  the  Mint  (p.  266)— received  since  this  chapter  was  written— was  $56,841,157,  a  trifle 
greater  than  the  coinage  of  1896. 


BIMETALLISM  IN  THE  UNITED  STATES  153 

after  be  maintained  at  a  parity  with  gold,  her  demand 
for  silver  for  coinage  purposes  would  be  largely  increased, 
probably  doubled. 

Sec.  285.  The  ^2,229,000,000  of  silver  money  in 
Asia  is  coined  at  a  ratio  of  IS  to  1;  and  at  that  ratio  an 
ounce  of  silver  will  coin  out  ^1.37.  There  is  virtually  no 
gold  money  in  Asia,  and  the  people  of  Asia  will  not 
part  with  their  silver  coins  under  any  consideration. 
None  of  it  could  be  sent  here  under  free  coinage  in  this 
country  at  16  to  1  without  a  loss  of  at  least  seven  cents 
per  ounce  on  its  coinage  value,  besides  cost  of  trans- 
portation. None  of  it  can  be  spared.  The  demand  in 
Asia  is  for  more  silver.  Even  the  gold  standard  advo- 
cates do  not  claim  that  any  silver  would  come  to  this 
country  from  Asia. 

Sec.  286.  In  the  rest  of  the  world,  exclusive  of  the 
United  States,  to-wit,  in  Egypt,  Cape  Colony,  South 
African  Republic,  Australasia,  and  all  of  North  and  South 
America,  exclusive  of  the  United  States,  there  is,  as 
reported  by  the  Director  of  the  United  States  Mint, 
^171,000,000  in  silver  coin.  The  population  of  the 
several  countries  in  which  this  coin  is  located  is  shown 
by  the  same  report  to  be  75,600,000,  which  would  give 
them  a  per  capita  circulation  in  silver  of  $2.38.  It  is  not 
at  all  likely  that  very  much  of  this  coin  would  come  to 
this  country  under  a  free  coinage  law.  We  might  and 
probably  would  get  some  silver  from  Mexico,  but  we 
could  not  by  any  possibility  get  enough  from  any,  or  all, 
of  these  countries  to  increase  materially  our  stock  of 
silver  money.  If  every  dollar's  worth  of  silver  coin  out- 
side of  Europe  and  Asia  would  come  to  this  country  and 
it  should  all  be  coined  into  our  money  it  would  add  but  a 
trifle  more  than  two  dollars  per  captia  to  our  circulation, 
and  I  think  it  will  be  conceded  by  all  candid  men  that 


154  BIMETALLISM 

such  an  addition  to  the  money  volume  of  the  country 
would  be  a  blessing  rather  than  an  injury. 

SEC.  287.  Moreton  Frewen,  an  eminent  English 
economist,  in  a  letter  written  to  the  Hon.  R.  P.  Bland, 
May  10,  1896,  said: 

''  As  to  whether  by  giving  silver  free  coinage  your  great  country 
can  maintain  steady  exchange  everywhere  at  16  to  1  between  gold 
and  silver,  I  am  not  going  to  dogmatize.  Hermann  Schmidt,  whose 
knowledge  of  exchange  problems  entitles  his  opinion  to  respect, 
thinks  you  can.  *  *  For  my  own  part,  I  have  always 
believed  that  Lord  Aldenham — then  Mr.  Gibbs — was  right  when 
he  declared  in  his  evidence  before  the  Currency  Commission  in  1886 
that  any  first  class  nation,  but  especially  America,  could  go  safely 
to  free  coinage.  *  *  On  a  certain  Monday  in  June,  1893, 
the  ratio  between  gold  and  silver  was  as  1  to  24;  on  Friday  of  the 
same  week  it  was  as  1  to^30;  your  'seventy  cent  dollar'  had  become 
a  'fifty  cent  dollar,'  atid  why?  Because  the  mints  of  a  single 
foreign  country — India  — not  a  first  class  country  in  point  of  trade 
—had  been  closed.  Presumably,  then,  had  the  India  mints  re-opened 
on  that  Friday  the  ratio  would  have  reverted  from  1  to  30  to  1  to  24 
before  the  following  Wednesday.  Now,  let  us  ask  those  who 
object  to  free  coinage  in  the  United  States,  what  would  have  been 
the  effect  if  on  the  same  Wednesday  you  had  opened  your  mints  to 
the  free  coinage  of  silver?  If  India,  single  handed,  had  been  able 
to  raise  the  ratio  20  per  cent. — that  is  from  1  to  30  to  1  to  24,  by  free 
coinage,  would  not  the  addititional  support  of  the  United  States 
have  carried  the  ratio  to  1  to  16,  a  raise  of  33  per  cent,  more?  And 
if  the  United  States  could  not  have  accomplished  this  through  free 
coinage,  will  somebody  explain  why? 

Sec.  288.  In  his  examination  before  the  Indian  Cur- 
rency Committee,  March  16,  1899,  immediately  following 
a  discussion  of  the  possibility  of  the  United  States,  India 
and  France  opening  their  mints  to  the  free  coinage  of 
gold  and  silver,  at  a  ratio  to  be  agreed  upon  between 
them,  and  certain  members  of  the  Committee  having 
expressed  a  doubt  of  France  entering  into  such  an  agree- 
ment, Lord  Aldenham  said: 


BIMETALLISM  IN  THE  UNITED  STATES  155 

"  Ques.  12,873.  You  said  you  would  like  France  to  come  into  the 
suggested  international  agreement? 
"  Ans. — Certainly,  and  anybody  else. 

"  Ques.  12,874. — Have  you  any  reason  to  believe  that  they  would 
be  open  to  entertain  such  a  proposal? 

"  Ans. — I  know  that,  whereas  they  were  indisposed,  there  is  now 
a  turn  in  the  tide  in  that  respect,  they  are  certainly  more  willing  to 
entertain  the  contemplation  of  such  a  thing.  As  you  will  see  from 
Colonel  Hay's  letter,  he  also  takes  that  view. 

**Ques.  12,875. — But  you  do  not  consider  their  consent  essential 
to  an  agreement  of  that  kind? 

"  Ans. — I  do  not. 

"  Ques.  12,876. — You  think  that  America  and  India  together 
would  form  a  broad  enough  basis? 

'*  Ans. — I  should  say  America  alone,  the  Indian  Mints  being  open 
to  silver.  I  do  not  say  America  and  India  together,  because  it 
would  involve  putting  India  upon  a  bimetallic  system,  which  I  do 
not  desire.  What  I  mean  is,  that  the  United  States  could  do  it  alone, 
because  France  for  eighty  years  almost  alone  maintained  the  ratio 
of  15>^  to  1,  without  a  check,  and  with  not  the  slightest  difference 
in  the  world,  aided  one  may  say — though  the  aid  was  not  very  great 
— toward  the  end  of  the  time,  (it  was  really  nearly  a  hundred  years) 
by  the  other  nations;  I  cannot  say  when  they  began  to  take  the 
same  view  or  adopt  the  same  ratio.  I  remember  when  Greece 
and  Switzerland  were  on  no  such  ratio.  1  say  that  if  France  could 
maintain  it  for  that  time,  the  United  States  could  maintain  it  quite 
as  well  now.  The  members  of  the  Gold  and  Silver  Commission 
expressly  said  that  what  would  enable  two  or  three  or  four  nations 
to  maintain  that  ratio  depended  on  their  population  and  commerce. 
Now,  the  population  of  France  was  then  somewhere  about  32  or  33 
millions.  The  population  of  the  United  States  is  said  to  be  some  75 
millions.  The  population  of  the  whole  Latin  Union  was  75  millions. 
So  that  the  United  States  have  the  same  population  that  those 
other  countries  together  had.  And  then  we  have  to  add  that  it  is 
not  population  only,  but  commerce;  indeed,  when  we  talk  of  com- 
merce you  must  include  population,  because  if  you  have  no  popula- 
tion to  produce  exports  and  no  population  to  consume  imports,  there 
can  be  no  foreign  commerce.  Now,  the  commerce  of  the  United 
States,  internal  and  external,  is  very  much  superior  to  that  of 


156  BIMETALLISM 

France  when  France  was  able  to  maintain  the  1S}4  to  1.  There- 
fore, I  say,  I  feel  no  doubt  in  my  own  mind  that,  as  France  main- 
tained a  much  more  difficult  ratio,  that  of  1SJ4  to  1,  the  United 
States  would  have  no  difficulty  in  maintaining  22  to  1.  But  for 
political  reasons,  and  prudential  reasons  too,  they  say  we  must  con- 
sult with  other  nations." 

Sec.  289.  In  the  above  discussion  the  Committee  was 
considering  a  ratio  of  22  to  1,  which,  if  adopted,  would 
raise  the  present  price  of  silver  bullion,  as  measured  by- 
gold,  about  50  per  cent.  Now,  does  it  not  necessarily 
follow  that  if  the  opening  of  the  mint  of  an  important 
nation,  like  the  United  States,  to  the  free  coinage  of 
silver  at  a  ratio  of  22  to  1,  would  raise  the  commodity 
value  of  silver  50  per  cent.,  and  make  the  commodity 
value  and  coinage  ratio  coincide  at  the  22  to  1  ratio,  that 
if  the  mint  was  opened  at  the  ratio  of  16  to  1  that  the 
commodity  value  and  the  coinage  ratio  would  coincide  at  the 
16  to  1  ratio?  In  either  case,  if  the  country  maintaining 
the  open  mint  is  able  to  receive,  and  does  receive,  coin 
and  float  as  money,  at  the  ratio  it  has  established  all  the 
bullion  presented  at  its  mint,  it  can  maintain  the 
established  ratio,  whether  it  be  22  to  1,  16  to  1,  or  any 
other  ratio  within  any  reasonable  limit,  and  if  it  cannot 
do  this  it  cannot  maintain  any  ratio. 

Sec.  290.  The  world's  volume  of  silver  money 
amounts  to  about  ^4,000,000,000,  nearly  all  of  which  is 
circulating  side  by  side  with  gold  and  is  discharging  the 
money  function  equally  as  well  as  gold  for  all  purposes 
except  for  exchange  between  gold-using  and  silver-using 
countries.  It  now  constitutes  a  part  of  the  world's 
volume  of  money  rated  at  its  nominal  or  coinage  value. 
An  international  agreement  establishing  a  ratio  of  22  to  1 
would  reduce  the  present  money  value  of  the  world's 
silver  money  from  1^4,000,000,000  to  $2,783,000,000  and 


BIMETALLISM  IN  THE  UNITED  STATES  157 

cause  an  immediate  contraction  in  the  money  volume  of 
;^  1,217,000,000.  Such  a  contraction  in  the  volume  of 
money  would  produce  a  financial  crisis  **the  far  spread- 
ing effects  of  which  it  would  be  impossible  to  foretell." 
Better,  a  thousand  times  better,  that  things  should 
remain  as  they  are  than  to  change  the  ratio  to  22  to  1,  or 
to   increase  the  amount  of  silver  at  all  in  the  silver  dollar. 

Sec.  291.  Several  plans  have  been  suggested,  some 
of  them  by  men  of  standii|g  as  financiers,  for  increasing 
the  monetary  use  of  silver,  or  as  a  kind  of  compromise 
between  the  bimetallists  and  the  gold  monometallists.  No 
doubt  some  of  these  plans  have  been  suggested  in  good 
faith,  but  they  are  all  fatally  defective  in  this,  that  they 
do  not  propose  to  do  the  one  thing  necessary,  namely,  to 
give  to  silver  the  same  mint  privileges  and  same  monetary 
power  that  they  give  to  gold.  Horace  Greeley,  in  1870, 
in  discussing  the  question  of  the  resumption  of  specie 
payments,  after  showing  the  absurdity  of  the  plans  sug- 
gested by  the  so-called  financiers  of  that  day,  said:  **  The 
way  to  resume  is  to  resume."  He  insisted  that  when 
the  Government  ceased  to  discriminate  against  its  paper 
money,  when  it  received  its  paper  money  for  all  demands 
due  the  Government,  it  would  become  as  good  as  gold. 
In  this  he  was  unquestionably  correct.  The  way  and  the 
only  way  to  re-establish  the  former  ratio  between  gold 
and  silver,  or  to  establish  and  maintain  any  ratio  between 
them,  is  to  give  both  metals  equal  mint  privileges  and 
equal  monetary  power  at  the  proposed  ratio. 

SEC.  292.  There  can  be  no  doubt  that  the  link  which 
held  the  metals  together  prior  to  1873  was  equal  mint 
privileges  and  equal  monetary  power;  and  any  plan  that 
does  not  include  the  restoration  of  this  broken  link  must 
fail.  It  stands  to  reason  that  the  relative  value  of  two 
metals  one  of  which  is  simply  a  commodity  and  subject 


158  BIMETALLISM 

all  the  fluctuations  resulting  from  the  law  of  supply  and 
uncertain  demand  and  the  other  a  money  metal  for  which 
there  is  an  unlimited  and  insatiable  demand  at  a  certain 
fixed  price  cannot  be  held  together  at  the  same  relative 
value. 

SEC.  293.  In  1878  it  was  believed  by  many  of  the 
members  of  our  Congress  that  the  decline  in  the  value  of 
silver  as  measured  by  gold  had  been  caused  by  the  over- 
production of  silver,  and  that,  if  a  demand  could  be 
created  for  the  surplus  silver,  the  former  relative  value  of 
gold  and  silver  bullion  would  be  restored.  Acting  upon 
this  belief  the  Bland-Allison  Act  was  passed.  This  law 
created  a  demand  for  two  million  dollars'  worth  of  silver 
bullion  per  month.  This  increased  demand  caused  a  rapid 
rise  in  the  price  of  silver  bullion  for  a  few  months,  but  soon  a 
reaction  set  in  and  silver  again  fell  to  a  lower  level  than 
before.  Not  satisfied  with  this  experiment  and  still 
believing  that  if  the  demand  was  great  enough  the  old 
relative  value  of  gold  and  silver  bullion  would  certainly  be 
restored,  the  Sherman  law  was  passed.  This  law 
increased  the  demand  for  silver  bullion  to  four  million  five 
hundred  thousand  ounces  per  month;  again  the  price  was 
stimulated  and  silver  rose  rapidly  in  value  for  a  short 
time,  but  it  soon  fell  again  in  value  to  a  lower  level  than 
before.  People  then  began  to  see  that  demand  alone 
would  never  restore  the  former  ratio,  and  that  the  only 
remedy  was  to  give  back  to  silver  what  had  been  taken 
from  it,  namely,  equal  mint  privileges  and  equal  monetary 
power. 

We  have  already  seen  that  there  is  now  a  demand  for 
all  the  silver  produced,  that  there  is  no  surplus  silver  in 
stock,  and  yet  the  price  has  a  downward  tendency.  The 
only  solution  of  the  problem  is  to  again  make  silver  a 
money  metal.     When  this  is  done  gold  and  silver  will 


BIMETALLISM  IN  THE  UNITED  STATES  159 

again  become  of  equal  value  at  the  ratio  fixed,  whether 
that  ratio  is  16  to  1,  22  to  1,  or  32  to  1.  If  it  is  desired  to 
still  further  reduce  prices,  if  it  is  believed  that  there  is 
too  much  money  in  the  world,  then  the  ratio  of  silver  might 
be  lowered  to  22  to  1,  or  32  to  1,  but  there  can  be  no 
other  possible  reason  for  reducing  the  value  of  silver. 

Sec.  294.  Mr.  Alfred  de  Rothschild,  delegate  from 
Great  Britain  to  the  International  Monetary  Conference 
held  at  Brussels  in  1892, (see  report,  p.  70)  for  the  alleged 
purpose  of  promoting  the  greater  use  of  silver,  submitted 
the  following  proposition: 

"  The  American  Government  are  purchasers  of  silver  to  the 
extent  of  fifty-four  million  ounces  yearly,  and  I  would  suggest  that, 
on  condition  these  purchases  were  continued,  the  different  European 
Powers,  should  combine  and  make  certain  yearly  purchases,  say  to 
the  extent  of  about  ;£5,000,000  sterling  annually,  such  purchases  to 
be  continued  over  a  period  of  five  years  at  a  price  not  exceeding  43 
pence  per  ounce  standard,  but,  if  silver  should  rise  above  that  price, 
the  purchases  for  the  time  being  to  be  immediately  suspended." 

Sec.  295.  When  we  take  into  consideration  the  fact 
that  the  average  annual  coinage  of  Europe  1891,  1892, 
1893  amounted  to  over  $32,000,000,  considerably  over 
;£6,000,000  sterling,and  the  proposal  of  Mr.  de  Rothschild 
was  that  **to  extend  the  use  of  silver  generally"  the 
**  European  Powers  should  combine  to  make  certain 
yearly  purchases,  say  to  the  extent  of  about  ;£5,000,000 
sterling,"  coupled  as  it  was  with  the  proviso  that  the 
purchases  should  immediately  cease  if  the  price  of  silver 
advanced  beyond  43  pence  per  ounce,  it  is  difficult  to 
believe  that  the  proposal  was  seriously  made.  The 
amount  of  silver  the  proposal  suggested  that  Europe 
should  purchase  was  less  than  it  was  taking  at  the  very 
time  the  proposal  made,  and  was  coupled  with  the  further 
proviso  that  if  silver  advanced  in  value  to  43d.  per  ounce 


160  BIMETALLISM 

(about  93  cents)  then  purchases  should  cease.  At  the 
time  this  conference  was  in  session  silver  was  worth  87 
cents  per  ounce  and  Mr.  de  Rothschild  proposed  to  hold  it 
there  **  in  order  to  extend  the  use  of  silver"  and  if  it 
advanced  in  value  6  cents  per  ounce  then  the  European 
Powers  should  combine  to  keep  it  down.  It  appears  from 
the  proceedings  of  the  Conference  that  the  proposition 
was  seriously  considered  and  discussed  although  (very 
fortunately  for  the  cause  of  silver)  it  was  not  adopted. 

Sec.  296.  Anson  Phelps  Stokes,  in  a  book  entitled 
*' Joint-Metallism/'  published  in  1896,  suggests  a  plan 
which  he  calls '*  a  safe  and  honest  plan  by  which  both 
gold  and  silver,  permanently  and  at  their  market  value, 
may  be  made  available  as  the  metallic  basis  of  currency." 
(See  his  book,  *'  Joint-Metallism,"  page  3). 

His  plan  is  to  coin  the  same  weight  of  silver  as  there  is 
weight  of  gold  in  the  ^5  gold  piece.  He  proposes  to  call 
such  silver  coins  **  standards;"  that  a  law  shall  be  enacted 
providing  that  all  debts  of  ;^10  or  upwards  contracted  six 
months  or  more  after  the  passage  of  the  act  may  be  paid 
one-half  in  gold  coins  and  one-half  in  such  number  of 
standards  as  shall  be  approximately  equal  thereto  accord- 
ing to  the  Government  ratio;  and  that  the  Government 
ratio  shall  be  fixed  by  the  Secretary  of  the  Treasury  on 
the  first  day  of  each  month  (commencing  six  months  after 
the  adoption  of  the  law);  that  the  Secretary  shall  desig- 
nate the  number  of  standards  most  nearly  the  average 
relative  market  value  of  gold  and  silver;  this  number  to 
be  the  ratio  for  that  month. 

Sec.  297.  Under  Mr.  Stokes'  plan  of  "  Joint-Metallism" 
not  only  would  silver  bullion  remain  a  commodity  but  also 
the  silver  coins  now  in  existence  would  be  reduced  to  the 
position  of  a  commodity  and  rated  at  a  gold  valuation.  The 
$4,000,000,000  in  silver  coins  now  in  circulation  and  now 


BIMETALLISM  IN  THE  UNITED  STATES  161 

discharging  the  money  function  at  its  face  value  equally 
as  well  as  gold,  under  such  an  arrangement  would  lose 
more  than  one-half  of  its  present  money  value  and  the 
value  of  the  world's  money  would  be  reduced  more  than 
^2,000,000,000.  Such  a  reduction  in  the  volume  of 
money  would  produce  a  financial  crisis  such  as  the  world 
has  never  known  and  would  reduce  to  bankruptcy  nine- 
tenths  of  the  business  men  all  over  the  world.  It  is  to  be 
hoped  that  but  few  men  can  be  found  who  would  give 
their  assent  to  such  a  foolhardy  experiment. 

Sec.  298.  Geo.  H.  Bonebrake,  President  of  the  Los 
Angeles  National  Bank,  about  two  years  since  formulated 
a  plan  for  the  **free  and  equal  coinage  of  gold  and  silver" 
from  which  I  copy  the  following: 

"The  country  should  adopt  a  single  gold  standard:  So  many 
grains  of  gold  should  be  a  dollar,  yet  my  idea  is  that,  notwithstand- 
ing gold  should  be  the  standard  there  can  be  other  money  coined 
and  made  as  valuable  as  gold.  Why  not  the  free  and  equal  coinage 
of  gold  and  silver?  It  is  not  impossible,  but  a  very  easy  matter  to 
coin  dollars  of  silver  equal  in  value  to  the  gold  dollar.  To  do  this  a 
Commission  of  eminent  financial  men  might  be  appointed  to  take 
into  consideration  the  additional  value  that  has  been  given  to  gold 
by  the  practical  demonetization  of  silver,  and  the  depreciation  of 
silver  by  its  practical  abandonment  as  money.  The  commission 
should  have  the  power  to  suggest  the  relative  values  between  gold 
and  silver  and  that  the  gold  dollar  coined  should  be  equal  in  value 
to  that  of  silver,  and  the  silver  dollar  should  be  equal  in  value  to 
that  of  the  gold  and  that  both  should  be  legal  tender  for  any  and  all 
debts  whatever.  We  need  a  broader  basis  of  redemption  money 
than  we  have  at  present." 

SEC.  299.  If  it  is  true  as  stated  by  President  Bone- 
brake,  that  the  divergence  between  gold  and  silver  has 
been  caused  by  the  demonetization  of  silver,  and  it 
unquestionably  is  true,  then  why  not  restore  to  silver  by 
law  what  we  have  taken  from  it  by  law  and  end  the 
difficulty?     If  as  Mr.  Bonebrake  says  gold  has  appreciated 


162  BIMETALLISM 

and  silver  depreciated  on  account  of  depriving  silver  of 
the  right  of  access  to  the  mint  and  depriving  it  of  its 
money  function,  does  it  not  necessarily  follow  that  by 
restoring  to  silver  its  mint  privileges  and  its  monetary 
power  the  old  relative  value  between  the  metals  would 
re-assert  itself? 

Sec.  300.  Some  years  ago  Col.  S.  N.  Wood,  a  promi- 
nent Greenback  orator  of  Kansas,  who  was  thoroughly 
posted  on  economic  questions,  after  reviewing  several 
proposed  plans  for  giving  silver  a  more  extended  use  as 
money  and  for  keeping  its  ratio  to  gold  steady  and  after 
showing  such  proposed  plans  must  fail  for  the  reason  that 
not  one  of  them  even  suggested  the  removal  of  the  cause 
which  had  produced  the  divergence  between  them,  in 
way  of  burlesque,  suggested  a  plan  for  keeping  the 
commodity  value  of  gold  and  silver  coins  on  a  parity, 
for  which  he  did  not  claim  perfection  but  which,  in  his 
opinion  was  superior  to  any  of  the  plans  suggested. 

Mr.  Wood's  plan  was  that  the  silver  dollar  when  coined 
should  be  coined  with  holes  in  it  ranging  in  size  from  an 
ordinary  pin  to  that  of  a  good  sized  slate  pencil.  He  sug- 
gested that  when  the  Government  issued  any  of  these 
dollars  it  should  furnish  the  persons  receiving  them  with 
an  assortment  of  silver  plugs  suitable  for  these  holes  (the 
Government  to  charge  for  the  plugs  the  value  of  the  silver 
contained  in  them).  The  holder  of  these  dollars  Mr. 
Wood  claimed  would  be  prepared  for  any  emergency  that 
could  possibly  arise.  If  silver  should  fall  in  value  he 
could  put  in  one  or  more  of  his  plugs,  if  it  should  rise  in 
value  he  could  knock  out  a  plug.  This  plan,  Mr.  Wood 
insisted,  would  be  much  more  simple  and  satisfactory 
than  any  of  the  plans  that  had  been  suggested.  This 
plan  would  save  the  expense  of  a  Commission  to  deter- 
mine the  relative  value  of  the  two  metals  as  any  man  of 


BIMETALLISM  IN  THE  UNITED  STATES  163 

ordinary  intelligence  could  plug  up  a  hole  or  knock  out  a 
plug  as  the  case  might  require.  In  this  way  said  Mr. 
Wood  the  relative  value  of  the  two  dollars  could  be  main- 
tained, both  dollars  would  be  equally  honest  and  the 
honor  of  the  Government  sustained.  Such  a  currency  he 
said  would  be  flexible  and  elastic  and  suited  to  the  wants 
of  a  great  commercial  people. 

Of  course  Mr.  Wood  was  simply  burlesqeuing  the  plans 
that  had  been  proposed,  but  I  submit  to  the  reader 
whether  the  plan  proposed  by  Mr.  Wood  is  not  as 
sensible  and  a  good  deal  more  philosophical  than  that  of 
Rothschild,  Stokes,  or  Bonebrake,  or  any  other  plan  that 
does  not  propose  to  give  both  metals  equal  mint  privileges 
and  equal  monetary  power. 

Sec.  301.  Of  course  no  country  could  raise  the  price  of 
silver  bullion  from  60  cents  per  ounce  to  ^1.29  per  ounce  or 
to  93  cents  per  ounce  by  simply  declaring  that  thereafter 
the  price  of  silver  bullion  should  be  $1.29  per  ounce  or 
93  cents  per  ounce,  nor  could  it  raise  its  price  at  all 
without  setting  in  motion  some  economic  force  that  would 
act  on  the  value  of  silver  bullion.  Prior  to  1873  the 
economic  force  set  in  motion  by  the  great  coining  nations 
of  the  world  that  held  the  relative  value  of  gold  and  silver 
comparatively  steady  all  over  the  world  was  the  law 
creating  an  unlimited  demand  at  the  coinage  ratio  for  all 
the  gold  and  silver  bullion  in  the  world  and  conferring 
upon  the  coins  of  both  metals  the  same  monetary  func- 
tions. Some  of  the  nations,  it  is  true,  coined  gold  only, 
some  silver  only,  and  some  both  gold  and  silver,  but 
taken  together  there  was  an  unlimited  demand  for  both 
gold  and  silver  at  the  mint  price.  So  long  as  this 
unlimited  demand  continued  and  the  coins  of  both  metals 
had  equal  monetary  power  it  was  impossible  for  the 
value  of  either  metal  to  fall  below  its  coinage  ratio. 


164  BIMETALLISM 

In  countries  where  one  of  the  metals  was  undervalued 
as  rated  by  the  mint  ratio  of  other  nations  that  metal  was 
liable  to  go  to  a  premium  in  the  country  undervaluing  it 
to  an  amount  equal  to  its  undervaluation,  in  which  event 
the  coin  would  be  exported  to  those  countries  giving  it  a 
higher  valuation,  but  the  premium  could  not  exceed  the 
difference  in  the  valuation  fixed  by  the  mint  ratio  of  the 
exporting  and  importing  countries.  Neither  was  it 
possible  for  either  of  the  metals  to  fall  in  value  below  the 
coinage  ratio  of  any  important  coining  country  that  was 
able  and  willing  to  receive,  coin,  and  float  it  as  money. 
And  it  is  equally  true  today  that  any  country  that  is 
sufficiently  powerful  to  create  and  maintain  an  unlimited 
demand  for  all  the  silver  bullion  presented  at  its  mint  at 
a  certain  fixed  ratio  between  the  metals  can  maintain 
that  ratio  whether  the  ratio  be  32  to  1,  22  to  1,  16  to  1, 
15 >^  to  1  or  any  other  ratio  fixed  within  any  reasonable 
limits. 

Sec.  302.  Sir  Guilford  Molesworth,  delegate  from  Indja 
to  the  International  Monetary  Conference  of  1892,  after 
having  shown  that  France  for  three-quarters  of  a  century, 
unaided  and  alone,  and  during  periods  extending  over 
many  years  when  the  relative  value  produced  of  first  one 
and  then  the  other  of  the  metals  had  been  largely  in 
excess,  sometimes  three-fold  and  even  four-fold  in  excess 
of  the  other,  had  maintained  their  relative  values  com- 
paratively steady  at  the  mint  price,  said:  **  With  this 
remarkable  experience  to  guide  us,  it  appears  probable 
that  the  United  States  of  America,  if  they  had  the 
courage  to  make  the  plunge,  might  maintain  the  equi- 
librium single-handed." 

Sec.  303.  I  have  no  doubt  that  the  United  States  can 
safely  go  to  the  free  coinage  of  silver  at  a  ratio  of  16  to  1 
without  an  international   agreement,   and  that  on    the 


BIMETALLISM  IN  THE  UNITED  STATES  165 

adoption  of  a  bimetallic  law  in  this  country — giving  silver 
and  gold  free  access  to  our  mints  on  equal  terms  at  that 
ratio — and  making  the  money  coined  from  both  metals  a 
full  legal  tender  for  all  purposes,  and  prohibiting  either 
of  them  from  being  discriminated  against  by  private  con- 
tract, this  country  can  maintain  their  relative  value 
approximately  steady  in  all  the  markets  of  the  world. 

Sec.  304.  In  an  article  published  in  the  Arena  for  June, 
1896,  I  gave  many  reasons,  other  than  those  given  in 
this  chapter,  why  the  United  States  could  safely  go  to 
free  coinage.  By  the  courtesy  of  the  Arena  I  am  per- 
mitted to  re-publish  that  article  as  an  Appendix  to  this 
volume,  and  I  call  the  attention  of  the  reader  to  that 
article  for  additional  reasons  why  the  United  States, 
without  an  international  agreement,  can  maintain  bimet- 
allism. Further  investigation  has  confirmed  me  in  the 
belief  that  my  conclusions  in  1896  were  correct. 


CHAPTER  XIX. 


THE  UNITED  STATES  ON  A  SILVER  BASIS. 

Sec.  305.  Let  us  suppose  that  on  the  adoption  of  free 
coinage  of  silver  in  the  United  States,  gold  would  go  to  a 
premium,  and  that  eventually  it  would  be  exported  from 
the  country,  and  the  United  States  would  go  to  a  silver 
basis — what  effect  would  such  a  change  in  the  monetary 
system  of  this  country  have  on  the  welfare  and  prosperity 
of  the  people?  I  do  not  think  there  is  any  probability  that 
under  a  bimetallic  law  which  gave  gold  and  silver  equal 
mint  privileges  and  equal  monetary  power  for  all 
purposes,  gold  would  go  to  a  premium,  or  that  it  would 
be  exported  from  the  country;  but  that  we  may  examine 
this  question  under  every  contingency  that  could  possi- 
bly arise,  let  us  suppose  that  it  would,  and  that  eventu- 
ally it  would  all  be  exported  from  the  country. 

Sec.  306.  No  one  anticipates  that  the  Government, 
or  the  individuals,  or  the  corporations,  now  owning  the 
$900,000,000  of  gold  coin  said  to  be  in  this  country, 
would  give  it  away;  consequently  if  the  gold  was 
exported  from  the  country  we  would  receive  in  exchange 
for  it  either  money  of  some  other  kind — presumably 
silver — or  commodities  of  equal  value  with  the  gold 
exported,  or  securities  executed  by  our  Government,  or 
by  our  corporations,  or  by  our  people  and  now  held  in 
foreign  countries.  If  our  gold  should  be  exchanged  for 
silver    money,   and  the  silver    money    had  the    same 


UNITED  STATES  ON  A  SILVER  BASIS  167 

purchasing  power  in  this  country  as  the  gold  —  as  it 
necessarily  would  have  under  a  properly  executed 
bimetallic  law  —  then  we  would  have  the  same  amount 
of  money  in  the  country  after  the  exchange  was  made 
that  we  had  before,  and  business  would  go  on  as  before. 
If  the  gold  was  exchanged  for  commodities,  then  the 
actual  wealth  of  the  country  would  be  increased  in  an 
amount  equal  to  the  value  of  the  commodities  so  received 
in  exchange  for  the  gold  exported.  If  the  gold  was 
exchanged  for  American  securities  held  abroad,  then  our 
foreign  debt  to  the  amount  of  ;^900,000,000  would  be 
paid,  and  the  annual  drain  of  the  interest  on  that  sum 
(probably  about  $45,000,000)  would  cease. 

Sec.  307.  We  have  already  seen  that  any  nation  can 
float  a  volume  of  money  without  any  regard  whatever  to 
the  material  of  which  it  is  made,  equal  to  its  distributive 
share  of  the  world's  money.  It  therefore  necessarily 
follows  that  if  $900,000,000  in  gold  should  leave  the 
country,  and  silver  did  not  come  to  our  mints  to  fill  the 
vacuum  so  created  in  our  currency,  paper  money  might  be 
issued  and  maintained  at  a  par  with  gold  to  an  amount  equal 
to  the  gold  exported  until  a  sufficient  volume  of  metallic 
money  was  forthcoming.  Also  if  our  gold  was  exchanged 
for  commodities,  and  silver  did  not  come  to  the  mint  to 
supply  the  place  of  the  gold  so  exported,  paper  money 
could  be  used  for  that  purpose.  In  either  of  these  cases, 
instead  of  being  injured,  we  would  be  benefitted  by  the 
exportation  of  the  gold;  in  the  first  place,  by  the 
extinguishment  of  $900,000,000  of  our  foreign  debt,  and 
by  the  annual  saving  of  $45,000,000  in  interest  charges; 
and  in  the  second  place,  by  an  increase  in  the  actual 
wealth  of  the  country  of  $900,000,000,  and  the  substi- 
tution—  as  Ricardo  says  —  of  **the  cheapest  in  place  of 
the  most  expensive  medium  "  of  exchange. 


168  BIMETALLISM 

Sec.  308.  If  the  gold  was  exchanged  for  money,  and 
the  money  received  was  of  the  same  value  as  the  gold, 
then,  of  course,  no  injury  or  inconvenience  would  result 
from  the  exchange.  Ah !  but,  say  the  gold  standard 
advocates,  the  money  received  would  not  be  of  equal 
value  with  gold;  the  money  received  would  be  silver, 
and  would  be  worth  about  one-half  as  much,  dollar  for 
dollar,  as  gold  is  worth.  When  it  is  suggested  to  these 
gentlemen  that  it  is  hardly  probable  that  the  men  who 
own  the  gold  now  in  the  United  States  would  exchange  it 
for  money  worth  only  half  as  much,  dollar  for  dollar,  but 
that  they  would  demand  value  for  value,  they  reply: 
**  Well,  if  worth  as  much  at  the  time  the  exchange  was 
made  it  would  soon  depreciate,  and  if  we  permit  the  free 
coinage  of  silver  at  the  ratio  of  16  to  1  the  United  States 
will  soon  be  on  a  silver  basis."  While  I  do  not  believe 
that  there  is  any  probability  of  this  country  going  to  a 
silver  basis  on  the  adoption  of  the  free  coinage  of  silver, 
yet,  if  it  did,  would  we  be  injured  by  it.? 

Sec.  309.  John  P.  Young,  an  able  economist  and 
managing  editor  of  the  San  Francisco  Chronicley  in  an 
article  on  Bimetallism  published  in  that  journal  August  3, 
1893,  said: 

"  But  the  suggestion  that  this  country  might  have  a  sole  silver 
currency  is  the  'bogie'  that  frightens  many  who  know  little  or 
nothing  of  the  subject.  To  have  a  sole  silver  CURRENCY,  in  their 
eyes  means  unparalleled  disaster.  Such  people  completely  ignore  the 
fact  that  during  the  period  that  we  had  a  sole  gold  currency  no  one 
thought  that  the  country  was  threatened  with  ruin  because  the 
dearer  silver  was  not  coined.  Such  as  gave  the  subject  a  thought 
at  all  and  had  any  real  knowledge  of  the  difficulty  desired  that  the 
mistake  of  undervaluing  silver  might  be  corrected,  but  they  would 
have  judged  a  man  a  fit  candidate  for  the  lunatic  asylum  had  he 
asserted  that  disaster  would  certainly  follow  the  free  coinage  of  gold 
because  it  was  cheaper  than  silver.  *  *  If  a  nation  has 
resources,  and  a  people  capable  of  developing  them,  it  will  increase 


UNITED  STATES  ON  A  SILVER  BASIS  169 

its  wealth  no  matter  what  sort  of  money  it  employs  to  circulate 
values,  provided  the  standard  of  values  is  not  tampered  with. 

"  Between  1860  and  1880  the  precious  metals,  silver  and  gold, 
were  not  used  to  circulate  values  in  the  United  States.  Our  only 
currency  was  the  greenback — except  in  California.  There  was  no 
demand  for  gold  except  that  artificially  created  by  promising  to  pay 
the  interest  on  bonds  in  money  of  that  metal,  yet  during  the  period 
in  question,  in  spite  of  a  devastating  war  during  which  production 
was  interrupted,  and  vast  quantities  of  property  destroyed,  the 
wealth  of  the  United  States  increased  from  $16,160,000,000  to 
$43,642,900,000,  or  nearly  three-fold  in  twenty  years.  If  the  theory 
of  those  who  make  a  fetich  of  gold  were  sound  this  could  never 
have  happened.  Nor  while  we  were  increasing  our  wealth  at 
home,  did  our  foreign  trade  suffer.  That  went  on  precisely  as 
described  by  John  Stuart  Mill  in  his  chapter  on  '  The  Foreign  Ex- 
changes.'   After  applying  an  illustration,  Mill  remarked: 

"  '  It  thus  appears  that  a  depreciation  of  the  currency  does  not  affect  the  foreign 
trade  of  the  country.  This  is  carried  on  precisely  as  if  the  currency  maintained  its 
value.  *  *  If  the  currency  is  depreciated  10, 15  or  20  per  cent.,  then  in 
whatever  way  the  real  exchange  arising  from  the  variation  of  international  debts  and 
credits  may  differ,  the  quoted  exchange  will  always  vary  10,  15  or  20  per  cent,  from  it. 
However  high  this  nominal  premium  may  be,  it  has  no  tendency  to  send  gold  out  of 
the  country  for  the  purpose  of  drawing  a  bill  against  it  and  profiting  by  the  premium, 
because  the  gold  so  sent  must  be  procured,  not  from  the  banks  at  par,  as  in  the  case 
of  a  convertible  currency,  but  in  the  market  at  an  advance  of  price  equal  to  the 
premium.'  "    (See  Mill's  Political  Economy,  Book  3,  Chap.  22,  Sec.  3). 

Sec.  310.  Professor  Cairnes,  in  his  **  Leading  Princi- 
ples of  Political  Economy,"  says: 

**  It  appears  to  me  that  the  influence  attributed  by  many  able 
writers  in  the  United  States  to  the  depreciation  of  the  paper  cur- 
rency, as  regards  to  its  effects  on  the  foreign  trade  of  the  country,  is 
in  a  great  degree,  PURELY  IMAGINARY.  An  advance  in  the  scale 
of  prices,  measured  in  gold  in  a  country,  if  not  shared  in  by  other 
countries,  will  at  once  affect  its  foreign  trade,  giving  an  impulse  to 
importations,  and  checking  the  exportation  of  all  commodities  other 
than  gold. 

"A  similar  effect  is  very  generally  attributed  by  American  writers 
to  the  action  on  prices  of  the  greenback  inconvertible  currency.  But 
it  may  be  easily  shown  that  this  is  a  complete  illusion.  Foreigners  do 
not  send  their  products  to  the  United  States  to  take  greenbacks  in 
exchange.    The  return  which  they  look  for  is  either  gold  or  the 


170  BIMETALLISM 

COMMODITIES  of  the  country;  and  if  these  have  risen  in  price  in 
proportion  as  the  paper  money  has  been  depreciated,  how  should  the 
advance  in  prices  constitute  an  inducement  for  them  to  send  their 
goods  thither?  The  nominal  gain  in  greenbacks  on  the  importation 
is  exactly  balanced  by  the  nominal  loss  when  those  greenbacks 
come  to  be  converted  into  gold  or  commodities.  The  gain  may,  in 
particular  cases,  exceed  the  loss,  but  if  it  does,  the  loss  will  also,  in 
other  cases,  exceed  the  gain.  On  the  whole,  and  on  an  average, 
they  cannot  but  be  the  equivalents  of  the  other."  (Quoted  from 
Senator  Jones'  1893  speech,  page  307.) 

Sec.  311.  What  is  true  in  regard  to  depreciated  paper 
money  would  also  be  true  in  regard  to  depreciated 
silver  money.  As  a  depreciated  paper  between  1860  and 
1880  did  not  in  the  least  impede  or  even  inconvenience 
our  foreign  trade  and  did  not  prevent  a  rapid  development 
of  the  country,  and  a  rapid  increase  of  wealth,  so  a 
depreciated  silver  money,  if  it  should  become  depreciated, 
and  the  United  States  was  on  a  silver  basis,  and  had  no 
money  but  silver  money,  would  not  impede  or  incon- 
venience our  foreign  trade  nor  prevent  the  development 
of  the  country  and  the  rapid  increase  of  wealth;  neither 
would  the  fact  that  it  was  at  a  discount,  as  measured 
by  gold,  drive  gold  out  of  the  country.  What  drives  gold 
out  of  the  country  is  not  the  fact  that  it  commands  a 
premium  in  other  kinds  of  money  in  such  country,  but 
the  fact  that  it  is  worth  more  in  other  countries  than  it  is 
in  the  country  where  it  is  located.  Gold  will  go  where 
it  has  the  greatest  purchasing  power.  If  gold  has  greater 
purchasing  power  in  Europe  than  it  has  in  the  United 
States,  due  regard  being  had  to  freights,  commissions, 
exchange,  etc.,  it  will  go  to  Europe  in  spite  of  any  effort 
we  may  make  to  retain  it,  unless  we  keep  it  under  lock 
and  key;  in  other  words,  unless  we  keep  the  price  of 
commodities  as  low  in  this  country  as  they  are  in  other 
countries.     To  maintain  and  keep  in  circulation  an  inter- 


UNITED  STATES  ON  A  SILVER  BASIS  171 

national  money  we  must  maintain  our  price  list  of  com- 
modities on  a  level  with  the  nations  with  which  we  have 
international  trade. 

Sec.  312.  The  fact  that  the  money  in  circulation  is 
depreciated  as  measured  by  gold,  the  so-called  **  money 
of  the  world,"  does  not  impede  exports  is  very  con- 
clusively shown  by  a  reference  to  the  exports  from  the 

United   States   during   the   period   1861  to  1880 both 

inclusive — a  period  of  twenty  years,  during  which  time 
the  business  of  the  country  was  being  carried  on  with  a 
depreciated,  inconvertible,  paper  money,  and  the  period 
from  1881  to  1897,  both  inclusive,  a  period  of  seventeen 
years,  during  which  time  we  have  been  enjoying  the 
benefits  and  advantages  of  a  gold  standard.  In  1861  the 
domestic  exports  from  this  country  amounted  to  ;^204,- 
899,616,  and  in  1880  to  $823,946,353,  an  increase  in 
twenty  years  of  $619,064,737,  or  303  per  cent.,  an 
average  yearly  increase  of  15  per  cent,  for  the  entire 
time,  and  this  increase  was  made  when  the  business  of 
the  country  was  being  done  with  a  depreciated,  incon- 
vertible, paper  money.  In  1881,  the  domestic  exports 
of  the  United  States  amounted  to  $883,925,947  and  in 
1897  to  $1,032,007,603,  an  increase  in  seventeen  years 
of  $148,081,656,  being  17  per  cent,  in  seventeen  years, 
or  an  average  annual  increase  of  1  per  cent,  under  a 
gold  standard.  But  it  should  be  borne  in  mind  that  the 
exports  for  the  year  1897  were  exceptionally  large,  which 
makes  the  showing  for  the  period  1881  to  1897  much 
larger  than  are  warranted  by  the  actual  exports  for  the 
entire  time.  If  the  total  time,  1881  to  1897,  is  taken  and 
the  total  exports  for  that  period,  it  will  be  found  that  the 
annual  average  export  was  only  $808,000,000,  or  less  by 
$75,000,000  than  the  exports  for  1881,  so  that  under  the 
gold  standard  regime  the  value  of  exports  have  actually 


172  BIMETALLISM 

fallen  off;  while  under  a  regime  of  depreciated  paper 
money  they  increased  over  300  per  cent  in  twenty  years. 
Sec.  313.  At  the  International  Monetary  Conference 
of  1892  the  declaration  of  the  Mexican  delegates  in 
explaining  the  effects  of  the  so-called  depreciation  of 
silver  on  the  business  interests  and  on  the  development 
of  their  country  (see  page  109),  said: 

"  The  depreciation  of  silver,  as  it  appeared  to  foreign  countries— 
for  in  our  own  country  values  have  not  perceptibly  changed — has 
produced  an  actual  premium  on  exportation.  Articles  which  were 
not  formerly  exported  are  now  sold  in  the  markets  of  Europe  and 
the  United  States  at  a  loss  of  8,  10,  or  15  per  cent.,  on  the  cost  of 
their  production  and  the  expenses  incurred,  because  compensation 
is  found  in  the  gain  in  exchange  of  25  or  30  per  cent.,  corresponding 
to  the  depreciation  of  silver,  and  for  this  reason  the  export  of  articles 
other  than  silver  has  risen  from  |6,000,000  in  1873  to  $27,000,000  in 
1891." 

Sec.  314.  This  shows  an  increase  in  Mexican  exports 
in  eighteen  years  of  350  per  cent.,  or  an  average  annual 
increase  of  over  19  per  cent,  during  that  period,  on  a 
depreciated  silver  money,  and  the  United  States — a  much 
more  enterprising  and  commercial  people  —  have  been 
actually  retrograding  during  the  same  time  under  the 
much -vaunted  **gold  standard"  "honest  money" 
system. 

Sec.  315.  From  a  paper  read  by  Professor  A.  R. 
Sprague,  before  the  Andrews  Economic  Club  of  Los 
Angeles,  California,  in  June,  1898,  on  the  effect  of  a 
depreciated  silver  money  on  the  industries,  progress  and 
development  of  countries  that  are  substantially  on  a  silver 
basis,  I  quote  the  following  paragraphs: 

"  In  1883  there  were  but  sixteen  cotton  mills  in  Japan,  with 
43,700  spindles.  In  1894  these  had  increased  to  forty-six  mills  with 
505,419  spindles.  During  the  next  year,  1895,  seven  mills  with 
160,000  spindles  were  added,  and  by  June  1,  18%,  the  number  of 


UNITED  STATES  ON  A  SILVER  BASIS  173 

spindles  had  increased  to  711,000.  This  would  indicate  that  the 
business  was  profitable,  but  we  are  not  left  to  mere  inference,  for 
Consular  Reports  show  that  in  1895  forty  mills  in  Osake,  Japan, 
paid  dividends  of  from  16  to  28  per  cent.,  while  the  least  dividend 
declared,  even  by  the  mill  most  poorly  managed,  was  8  per  cent. 
During  much  of  this  time,  British,  German,  and  American  mill 
owners,  whose  real  fixed  charges  were  constantly  increasing  as  the 
premium  rose  on  gold,  admitted  that  they  were  running  at  a  loss. 

"  During  this  same  time,  too,  the  foreign  trade  of  Japan  increased 
from  178,000,000  to  $296,000,000.  [An  increase  of  279  per  cent,  in 
thirteen  years,  or  an  average  annual  increase  of  more  than  21  per 
cent.]  In  the  same  way  during  this  period,  Mexico,  and  India,  too, 
increased  greatly  in  manufactures  and  foreign  trade.  As  conditions 
now  stand  our  facilities  in  manufacturing  enable  us  to  fill  up  the 
home  market  in  most  lines  of  production  by  running  half  or  three- 
fourths  of  the  time,  after  which  achievement  the  mills  must  shut 
down  until  consumption  has  again  depleted  the  market.  This 
spasmodic  activity  is  most  unprofitable  in  every  way,  deluding 
workmen  by  wages  which  are  nominally  nearly  twice  as  high  as 
the  real  wages,  which  should  be  determined  by  dividing  the  amount 
received  per  year  by  the  whole  number  of  working  days  per  year. 
In  case  gold  should  go  to  a  premium,  the  advantage  to  us, 
(if  we  were  on  a  silver  basis),  would  enable  our  manufacturers  to 
run  their  factories  on  full  time,  and  probably  increase  their  present 
capacity,  thus  providing  employment  for  a  large  portion  of  our 
population  that  must  now  be  supported  in  enforced  idleness  by  those 
who  have  work.        *       * 

"  The  effect  upon  the  producers  of  agricultural  staples  would  also 
be  favorable,  as  it  would  virtually  provide  an  export  bounty,  since 
almost  the  entire  export  is  sold  in  gold  standard  markets,  and  the 
same  advantage  would  be  obtained  as  was  observed  in  the  case  of 
the  cotton  cloth  exportation.  The  extraordinary  increase  in  the 
export  of  wheat  from  India  from  1885  to  1895  must  be  regarded  as 
due  in  very  large  measure  to  this  influence,  since  it  was  the  only 
important  new  force  acting  steadily  in  the  same  manner  through 
this  decade  of  years. 

"  The  increased  prosperity  of  India  under  a  falling  exchange,  due 
to  an  increasing  premium  on  gold,  is  pretty  generally  conceded  by 
the  British  Commission,  although  the  tremendous  influence  of  the 


174  BIMETALLISM 

British  Civil  Service  was  thrown  against  the  proposition.  That 
the  result  would  be  similar  in  this  country  under  such  a  condition 
seems  most  probable  both  from  theory  and  experience." 

Sec.  316.  Count  Mirbach,  in  a  debate  in  the  Reich- 
stag, February  15,  1895,  said: 

"  If  America  goes  over  to  the  silver  basis,  being  united  with  Asia, 
and  the  two  being  cut  off  from  the  gold  lands  by  such  fluctuations 
in  exchanges,  she  will  blot  out  all  the  commerce  of  the  gold-using 
nations  of  the  world." 

Sec.  317.  The  London  Financial  News,  one  of  the 
leading  financial  papers  In  Great  Britain,  on  March  10, 
1896,  contained  the  following  leading  editorial,  which 
shows  how  English  financiers  regard  free  coinage  in  the 
United  States.  The  Financial  News  without  doubt  is 
correct  as  to  the  results  that  would  follow  free  coinage  in 
this  country: 

"The  financial  situation  in  the  United  States  is  very  serious. 
The  Senate  has  blocked  all  relief  measures  proposed  by  President 
Cleveland,  and  Congress  is  at  a  dead  standstill  on  the  money 
question.    The  free  coinage  Senators  are  masters  of  the  situation. 

"The  condition  of  affairs  in  the  United  States  Congress  demands 
immediate  attention  of  British  financiers  and  statesmen.  The  trade 
of  the  world  is  now  in  our  hands,  but  it  will  not  long  remain  there 
if  the  United  States  goes  to  a  bimetallic  basis,  with  free  and 
unlimited  coinage  of  silver.  With  the  addition  of  silver  to  the 
volume  of  money,  everything  in  America  would  take  on  a  new  face. 
Labor  and  industry  would  gain  new  life.  The  grip  of  the  gold 
standard  on  the  products  of  the  world  would  be  loosened,  and  prices 
would  rise.  Great  Britain  would  lose  her  markets  in  South  America, 
Asia  and  Europe,  and  American  ships  would  not  be  long  in  captur- 
ing the  carrying  trade  of  the  world.  British  creditors  must  now 
apply  themselves  quickly  to  the  American  Money-problem. 

"The  sound  money  men,  and  banking  interests,  led  by  Senator 
Sherman  and  by  Cleveland  and  Carlisle,  with  a  plentiful  supply  of 
means,  have  been  beaten. 


UNITED  STATES  ON  A  SILVER  BASIS  175 

"  The  American  people  are  now  thoroughly  aroused  and  educated 
on  the  power  and  use  of  silver  money,  and  made  desperate  by  debt, 
and  business  depression,  they  are  forcing  free  silver  as  the  main 
issue. 

"  Great  Britian  need  fear  no  injury  to  her  trade  or  her  invest- 
ments if  the  Republican  party  can  force  the  protective  tariff  as  the 
main  issue  in  the  coming  presidential  campaign,  but  if  free  silver 
dominates  the  American  mind  and  carries  at  the  polls,  it  will  bring 
about  a  change  in  England  that  will  be  ruinous  from  its  suddenness 
and  severity. 

"  The  damage  that  can  be  done  British  manufactures  by  a  protec- 
tive tariff  is  slight  compared  to  the  disasters  that  would  be  entailed 
by  a  change  from  a  single  gold  to  a  complete  bimetallic  standard. 
It  is  evident  that  the  Democratic  party  will  not  re-nominate  a  man 
who  holds  to  President  Cleveland's  ideas  on  money,  and  the  only 
hope  for  the  continuation  of  Mr.  Cleveland's  financial  policy  will  be 
in  the  success  of  the  Republicans  in  the  next  election.  The  success 
of  free  coinage  will  bring  down  the  rate  of  interest  on  money,  and 
cause  an  immediate  rise  in  the  price  of  all  commodities.  When 
silver  becomes  primary  money,  the  American  mines  will  pour  their 
products  into  the  mints,  and  a  new  era,  similar  to  that  produced  by 
the  issue  of  greenbacks  during  the  civil  war,  will  begin.  Gold 
will  leave  the  banks  and  enter  into  competition  with  silver  in  the 
avenues  of  trade,  and  the  manufactories  of  the  United  States,  which 
have  been  shut  down  or  crippled  since  1892,  will  again  resume  their 
fight  for  the  British  markets.  It  is  doubtful  if  the  Republican 
party  can  be  held  much  longer  in  check  by  sound  money  statesmen, 
as  its  adherents  are  divided  by  powerful  factions.  The  Democratic 
party  is  also  breaking  up  under  free  silver  agitation.  It  matters  not 
to  Great  Britian  which  party  succeeds  if  the  gold  standard  is 
maintained,  but  either  of  the  old  parties,  or  a  new  party,  which  goes 
into  power  pledged  to  free  coinage  will  be  inimical  and  prejudicial  to 
English  manufactures  and  trade.  The  American  people  cling  with 
wonderful  tenacity  to  party  organizations,  but  financial  embarrass- 
ment and  business  stagnation  has  become  too  severe  for  their 
patience  and  they  are  ready  for  any  change  that  promises  relief. 
They  are  becoming  convinced  that  it  cannot  be  found  in  the 
protection  theory,  as  that  has  been  tried,  and  they  are  resting  now 
on  Free  Silver.  When  this  issue  comes  fairly  before  the  American 
people,  England  will  regret  her  apathy  and  adherence  to  the  single 
gold  standard." 


176  BIMETALLISM 

Sec.  318.  If  this  country  should  go  to  Bimetallism  at 
a  ratio  of  16  to  1,  and  silver  on  the  adoption  of  Bimetallism 
should  become  worth  as  much  as  gold  at  the  ratio  fixed, 
and  the  par  of  exchange  between  the  two  metals  was 
maintained,  then,  of  course.  Bimetallism  would  not  hurt 
the  business  interests  of  the  country  but  would  benefit 
them  by  increasing  the  volume  of  money,  raising  prices, 
and  stimulating  business  generally.  No  one  disputes,  or 
can  dispute,  this  proposition.  If,  however,  silver  should 
go  to  a  discount  in  gold,  there  can  be  no  question  that 
the  benefits  arising  from  Bimetallism  would  be  even 
greater  and  more  pronounced  than  they  would  be  if 
exchange  remained  stable  at  the  coinage  ratio.  Our  own 
experience  with  a  depreciated  paper  money,  and  the 
experience  of  every  country  now,  or  recently,  using 
silver  as  their  standard  money,  warrants  this  conclusion. 
There  is,  therefore,  nothing  to  fear  from  Bimetallism, 
nothing  to  lose,  and  everything  to  gain.  Let  us  have 
Bimetallism,  and  let  us  have  it  now  and  without  waiting 
for  the  permission  or  co-operation  of  any  other  country. 


CHAPTER  XX. 


MEXICO  AND  SILVER  MONEY. 

Sec.  319.  In  order  to  ascertain  from  investigation  on 
the  ground  what  effect  a  cheap  silver  money  was  having 
on  the  exports  and  imports  of  Mexico,  on  manufacturing 
industries,  on  agriculture,  on  the  wages  of  wage  workers, 
and  on  the  general  development  of  the  country,  1  visited 
that  country  in  February,  1899,  and  spent  two  months  in 
the  investigation  of  these  questions  in  the  City  of  Mexico 
and  in  other  manufacturing  centers. 

Sec  320.  I  have  already  quoted  from  the  declaration 
of  the  Mexican  delegates  to  the  International  Monetary 
Conference  of  1892,  their  statement  showing  the  increase 
of  exports  other  than  silver  that  had  taken  place  in 
Mexico  between  1873  and  1891.  (See  Sec.  313).  I  now 
quote  from  the  official  reports  of  the  Mexican  Government 
figures  showing  the  increase  of  exports  since  1891  up  to 
and  including  the  fiscal  year  1897-98.  The  total  exports 
in  1897-98  amounted  to  ^128,972,749,  of  which  $61,335,- 
647  was  for  exports  other  than  silver,  which  shows  an 
increase  of  $34,335,647  in  seven  years,  which  amounts  to 
an  increase  of  127  per  cent.,  an  average  annual  increase 
of  18  per  cent.  The  increase  in  Mexican  exports  for  the 
fiscal  year  1897-98  over  the  preceding  year  was  $17, 626- 
397.  If  the  total  period  frofn  1873  and  1898  is  taken  into 
consideration  and  the  total  increase  from  $6,000,000  to 
$61,000,000  it  shows  an  increase  of  1022  per  cent,  or  an 

13 


178  BIMETALLISM 

average  annual  increase  of  more  than  40  per  cent,  for  the 
intervening  25  years.  (See  Mexican  Trade  Review  for 
February,  1899.) 

Sec.  321.  The  Mexican  delegates  were  unquestionably 
correct  in  their  conclusion  when  they  said:  **  The  depre- 
ciation of  silver  as  it  has  appeared  to  foreign  countries 
— for  in  our  own  country  values  have  not  perceptibly 
changed — has  produced  an  actual  premium  on  exporta- 
tion.'' Silver  is  still  the  money  of  Mexico.  Everything 
produced  in  Mexico  is  produced  on  a  silver  basis,  but 
they  sell  their  exports  for  gold.  It  must  be  perfectly 
apparent  that  they  can  sell  commodities  produced  on  a 
silver  basis  at  a  considerable  loss  on  the  cost  of  their 
production  when  measured  by  silver,  and  still  make  an 
enormous  profit  by  the  100  per  cent  premium  they  obtain 
for  the  gold  they  receive  in  exchange  for  their  exported 
commodities. 

Sec.  322.  An  article  entitled  **  Mexico  Twenty-two 
Years  Ago  and  To-day,"  was  published  in  the  Mexican 
Trade  Review,  March,  1899,  written  by  I.  Dublan  Monte- 
sinos,  an  able  Mexican  writer.  Senor  Montesinos,  after 
quoting  figures  from  the  official  reports  showing  the 
enormous  increase  in  Mexican  exports  during  that  time, 
says: 

*'  This  increase  of  our  exports  is  MAINLY  DUE  TO  THE  LOW 
PRICE  OF  SILVER  IN  RECENT  YEARS.  Contrary  to  the  general 
belief  abroad,  the  low  price  of  silver  far  from  being,  or  having  been, 
injurious  to  this  country,  has,  on  the  contrary,  proved  a  great 
beneficial  boon,  since  having  at  hand  as  we  do,  most  every  l<ind  of 
raw  materials  for  manufacturing  purposes  and  paying  our  labor  in 
silver,  we  can  now  produce  at  home  many  articles  which  but  a  few 
years  ago  we  had  to  import  from  abroad  paying  their  price  in  gold. 
The  same  can  be  said  of  all  our  tropical  products.  The  depression 
of  the  white  metal  has  given  them  a  great  impetus,  while  we  reckon 
their  production  in  silver,  we  sell  them  in  foreign  markets  at  gold 
figures.       *       *       " 


MEXICO  AND  SILVER  MONEY  179 

He  also  says: 

"  The  intellectual  progress  of  a  nation  is  measured  by  the  number 
and  equipment  of  its  public  schools.  The  education  of  the  Mexican 
people  is  the  greatest  problem  now  confronting  the  Mexican 
Government  and,  therefore,  is  now  receiving  from  it  all  due  con- 
sideration. Thousands  of  new  schools  have  been  opened  during  the 
peaceful  period  under  review  and  while  in  1877  there  were  only 
about  8,000  public  schools  they  number  to-day  over  20,000  and  the 
Federal  Government  as  well  as  those  of  the  different  States  are 
daily  increasing  the  number.  The  present  generation  of  the 
ignorant  class  of  Mexicans  may  not  profit  at  all  from  this  spreading 
of  education;  but  the  next  generation  will  take  advantage  of  it  and 
they  will,  undoubtedly,  be  quite  different  from  their  fathers  who 
now  earn  barely  sufficient  to  meet  the  first  necessities  of  life,  because 
of  their  habitual  indolence,  lack  of  ambition  and  almost  complete 
ignorance. 

"  The  industrial  movement  has  been  very  marked  during  the  last 
few  years.  All  kinds  of  factories  are  springing  up  throughout  the 
country  ENCOURAGED  BY  THE  LOW  PRICE  OF  SILVER,  and  the 
decided  protection  given  to  them  by  the  Government  such  as  the 
exemptions  from  fiscal  charges,  the  admission  of  machinery, 
implements  and  many  raw  materials  free  of  customs  duty,  as  well 
as  the  present  excellent  and  prospective  home  market,  not  to 
mention  the  hope  of  many  manufacturers  who  expect  to  send  their 
goods  to  Central  and  South  America,  once  the  projected  railroads 
now  in  construction  reach  the  Pacific  Ocean. 

"  Thus,  at  a  glance,  can  be  seen  the  noted  contrast  between  the 
Mexico  of  today  and  that  of  1877.  Surely  this  country  is  rapidly 
taking  her  proper  place  among  the  civilized  nations  of  the  world 
and  undoubtedly  her  future  is  assured." 

Sec.  323.  When  in  the  City  of  Mexico  I  submitted  to 
the  editor  of  the  Mexican  Trade  Review  a  series  of  ques- 
tions in  writing,  which  he,  in  turn,  handed  to  Mr.  J.  P. 
Taylor,  one  of  the  best  informed  men  in  Mexico  on  the 
economic  condition  of  that  country,  and  an  economist  of 
no  mean  ability.  Mr.  Taylor  was  formerly  the  editor  of 
The  Trader,  published  in  the  City  of  Mexico.  Mr.  Taylor 
kindly  answered  my  questions  in  the  April  number  of  the 


180  BIMETALLISM 

Mexican  Trade  Review.    The  questions  and  answers  were 
as  follows: 

Question  No.  1— Wliat  is  the  present  condition  of  Mexico- 
prosperous  or  otherwise? 

Answer — This  is  a  question  which  is  easily  answered.  The 
present  condition  of  Mexico  is  decidedly  prosperous— prosperous 
without  precedent  in  the  history  of  the  country.  This  remark 
applies  especially  to  our  three  great  industries:  mining,  agriculture 
and  manufacturing.  It  likewise  applies  to  the  national  finances. 
Four  or  five  years  ago  Mexico's  national  expenditure  considerably 
exceeded  her  income.  Now  she  has  a  surplus  of  income  over 
expenditure.  Four  or  five  years  ago  Mexican  bonds  could  be  easily 
purchased  at  a  little  more  than  half  their  face  value.  Now  they  are 
above  par.  Even  Mexican  State  bonds,  which  no  one  would  touch 
a  few  years  ago,  can  now  be  placed  at  their  nominal  value. 

Question  No.  2— What  is  the  position  of  wages  now  as  compared 
with  10  or  15  years  ago? 

Answer— There  has  been  a  considerable  increase  in  some  districts 
and  very  little  or  none  in  others.  On  the  whole,  however,  it  may 
be  said  that  wages  have  increased  from  10  to  15  per  cent,  since  1885. 
As  a  general  rule,  there  is  but  little  skilled  labor  in  the  country,  and 
this  commands  comparatively  high  remuneration.  Almost  invaria- 
bly the  establishment  of  enterprises  in  a  given  district  by  foreigners 
is  followed  by  an  increased  rate  of  wages.  Agricultural  laborers 
earn  as  low  as  27)4  cents  in  some  places  and  as  much  as  75  cents  in 
others,  the  latter  being  few  and  far  between.  He  finds  his  own 
food,  but  is  generally  supplied  with  some  sort  of  house  accommoda- 
tion. Other  laborers  earn  a  higher  rate  of  wages,  on  the  whole — 
from  50  to  75  cents  per  day;  in  the  case  of  operatives  in  manufacto- 
ries, for  instance.  It  must  be  remembered  that  the  Mexican 
laborer's  wants  are  few  and  are  cheaply  and  easily  supplied. 

Question  3— Is  there  a  demand  for  all  available  labor? 

Answer — There  is.  Indeed,  just  now  laborers  are  scarce  in  many 
districts.  Naturally  every  dolla/of  foreign  money  brought  into  the 
country  has  a  tendency  to  increase  the  demands  for  labor  and  to 
raise  the  wages  of  the  laborer.  The  scarcity  of  labor  in  the  districts 
alluded  to  is  met  by  the  introduction  of  labor  from  districts  in  which 
there  is  a  superabundance  of  it.  If  labor-saving  machinery  was 
employed  to  a  greater  extent — comparatively  little  of  it  is  used  here 


MEXICO  AND  SILVER  MONEY  181 

now — the  labor  of  the  country  would  be  sufficient  to  meet  the 
demand  for  some  years  to  come.  Then  the  laborers  themselves, 
and  this  especially  applies  to  the  older  ones,  have  little  ambition  and 
are  easily  satisfied — hence  they  are  not  inclined  to  over-exert  them- 
selves. The  younger  ones,  however,  who  receive  a  smattering  of 
education  in  the  public  schools,  are  more  industrious  for  the  reason 
that  their  wants  are  greater,  and  things  which  were  luxuries  to 
their  fathers  are  necessaries  to  the  children.  The  efficiency  of  labor 
is,  therefore,  increasing.  Notwithstanding  all  this,  attempts  are 
now  being  made  to  introduce  Chinese  or  Japanese  laborers,  and  one 
or  two  batches  of  Chinese  have  already  arrived. 

Question  4 — What  is  the  purchasing  power  of  silver  as  compared 
with  1873? 

Answer — This  is  a  question  which  cannot  be  readily  answered. 
Leaving  out  of  question  goods  of  foreign  manufacture — imported 
articles  — it  may  be  said  that  the  purchasing  power  of  silver  has 
altered  but  little  since  the  year  named.  Increased  means  of  trans- 
portation has  had  a  tendency  to  make  things  cheaper  in  many 
localities.    Other  causes  have  been  at  work  with  the  same  result. 

Question  5— What  is  the  condition  of  the  manufacturing  indus- 
tries as  compared  with  1873  ? 

Answer — Mexico  had  very  little  manufacturing  in  1873.  Her 
great  manufacturing  industries  have  been  almost  wholly  established 
since  that  year  if  we  leave  the  manufacture  of  cotton  goods  out  of 
consideration,  and  this  has  probably  trebled  during  the  period 
referred  to.  Our  manufacturing  industries  are  now  doing  remarka- 
bly well— netting  as  a  rule  from  20  per  cent,  upwards  on  the  capital 
employed. 

Question  6 — Condition  of  agriculture  as  compared  with  1873? 

Answer — It  has  vastly  improved  in  every  sense,  especially 
tropical  or  semi-tropical  culture. 

Question  7 — Business  failures? 

Answer— These  are  and  always  have  been  remarkably  few  in 
Mexico.  The  Mexican,  from  a  business  standpoint,  may  be  at 
times  wanting  in  enterprise,  but  he  pays  his  debts.  He  is  slow, 
often  enough,  but  he  is  sure.  It  has  often,  and  more  or  less  truly, 
been  said  that  there  are  more  business  failures  in  a  comparatively 
small  city  in  the  United  States  than  in  the  whole  of  Mexico. 

Question  8 — What  does  the  exportation  of  Mexico  amount  to? 


182  BIMETALLISM 

Answer — For  the  financial  year  1897-98  the  value  of  Mexican 
exports  was  $128,972,749,  being  greater  by  $17,626,255  than  that  of 
the  previous  financial  year. 

Question  9— Would  Mexico  be  benefitted  by  the  adoption  of  a 
gold  valuation  ? 

Answer—  I  am  firmly  of  opinion  that  it  would  not.  Explain  it  as 
you  will  but  the  fact  remains  that  Mexico's  greatest  development— 
especially  in  the  manufacturing  line— dates  from  the  time  when 
silver  commenced  to  seriously  decline  in  value.  Strange  as  it  may 
appear  at  first  sight,  the  question  of  the  appreciation  of  gold,  or  the 
depreciation  of  silver — put  it  as  you  will — does  not  appear  to  con- 
cern the  great  bulk  of  the  Mexican  people.  Their  silver  dollar  buys 
practically  as  much  home  products  as  it  did  years  ago,  and  they  are 
content.  The  rate  of  exchange  causes  them  no  sleepless  nights. 
With  reference  to  the  manufacturing  interests  it  may  be  said  that 
the  depreciation  of  silver  affords  them  extra  protection,  for  it  has  a 
tendency  to  shut  out  foreign  manufactures  which  have  to  be  paid 
for  in  gold.  The  same  thing  largely  applies  to  the  tropical  agricul- 
turist. He  pays  his  wages  in  silver  and  sells  his  product  for  gold. 
This  is  likewise  true  of  the  copper  and  gold  mine-owner. 

No  doubt  the  fact  that  the  Government  had  to  pay  the  interest  on 
its  foreign  debt  in  gold  was  a  serious  drawback— if  not  menace — to 
the  country  some  few  years  ago,  but  now  Mexico  bears  the  burden 
with  the  greatest  ease.  Our  great  railways,  too,  were  seriously 
affected  in  more  ways  than  one  by  the  depreciation  in  silver,  for 
they  had  to  pay  interest  on  the  bonds,  etc.,  in  gold.  In  fact  they 
and  some  other  foreign  companies  operating  in  Mexico  were  placed 
in  a  similar  predicament  to  that  of  the  Government.  Local  traffic — 
the  most  remunerative  of  all,  in  one  sense— was,  however,  largely 
stimulated  for  reasons  already  mentioned,  and  our  railways  are  year 
by  year  gradually  increasing,  not  only  their  gross  receipts  but  their 
net  earnings  as  well. 

On  the  whole  it  may  be  said  that  Mexico  is  perfectly  satisfied 
with  her  silver  standard  and  evinces  no  disposition  to  change  it. 
All  that  is  asked  is  that  the  rate  of  exchange  should  be  steady,  for 
fluctuations  in  exchange  are  very  detrimental  to  importers  and  others. 

Whether  the  silver  standard  would  be  a  good  thing  for  another 
country  I  do  not  know — It  certainly  seems  advantageous  for  Mexico. 
The  thing  which  was  once  thought  to  be  a  curse  has  turned  out  a 
blessing.  J.  P.  TAYLOR. 


MEXICO  AND  SILVER  MONEY  183 

Sec.  324.  I  reproduce  a  part  of  an  interview  had 
with  Senor  Rafael  Reyes  Spindola,  the  editor  and  pro- 
prietor of  El  Mundoj  the  leading  Spanish  paper  of  the 
republic  of  Mexico.  This  interview  was  had  about  the 
first  of  February,  1899,  with  Senor  Spindola  by  a  reporter 
of  the  New  Orleans  Picayune,  and  was  originally  pub- 
lished in  the  Picayune  and  afterwards  republished  in  the 
Mexican  Herald.  I  quote  from  the  Mexican  Herald  of 
February  14,  1899,  Senor  Spindola  said: 

**  Silver  has  been  the  prosperity  of  the  republic  of  Mexico,"  said 
Senor  Rafael  Reyes  Spindola,  the  editor  and  proprietor  of  "El 
Mundo,"  the  leading  Spanish  newspaper  of  that  republic,  who  is  a 
guest  of  the  St.  Charles  for  the  carnival  season.  "  The  Mexican 
Government  will  never  think  of  going  to  a  gold  basis.  If  all  the 
silver  production  in  the  world  should  cease,  yet  Mexico  could  con- 
tinue to  do  it  with  profit.  This  is  possible  not  only  on  account  of 
the  cheapness  of  labor,  but  by  the  help  of  the  mining  laws." 

"  Do  you  consider  that  a  silver  standard  would  be  of  like  benefit 
to  the  United  States?"    asked  the  "  Picayune  "  reporter. 

*'  From  a  Mexican  standpoint  I  would  say  that  the  United  States 
would  be  infinitely  better  with  a  silver  standard.  It  would  be  the 
best  way  for  American  industries  to  secure  the  trade  from  Europe. 
With  a  silver  standard,  from  pole  to  pole,  America  could  control  the 
European  markets  and  be  the  absolute  master  of  the  trade  situation 
of  the  world.  All  the  South  American  republics  would  then  trade 
with  the  United  States;  they  would  not  buy  a  pin,  even,  of  Europe 
under  those  conditions. 

"The  Mexican  army  formerly  numbered  30,000  men,"  said  he, 
"while  today  the  army  only  numbers  18,000  men.  Instead  of 
bearing  arms,  these  men  have  gone  out  of  the  army  onto  the 
plantations,  into  the  fields,  into  the  mines,  working  and  developing 
the  country.  That  is  what  we  are  doing  with  our  standing  army — 
developing  the  soil,  the  mines,  the  rivers  and  harbors.  That 
reduces  the  expense  of  the  Government  fully  one-half. 

"  Fifteen  years  ago  the  Mexican  debt  had  no  standing  at  all  in 
the  foreign  markets — it  was  not  even  quoted.  Today  the  same 
bonds  in  London  and  Berlin  are  at  par  and  the  credit  of  the  country 
is  excellent. 


184  BIMETALLISM 

**  The  deficit  of  the  Government  was  formerly  between  eight  and 
nine  millions  of  dollars.  Now  there  is  a  surplus  of  twenty  millions 
of  dollars,  after  paying  off  all  the  coupons  on  the  foreign  and 
internal  debt. 

"The  Government  budget  twenty  years  ago  was  drawn  for 
twenty  millions  of  dollars:  today  that  budget  calls  for  fifty-two 
millions,  which  proves  very  conclusively  the  increase  in  the  export 
and  import  trade  of  the  country. 

"Railroads— twenty  years  ago  Mexico  had  only  500  miles  of 
railroad;  today  there  are  17,000  miles  of  railroad  in  constant  opera- 
tion, most  of  which  receives  a  subsidy  from  the  Government.  One 
noted  exception,  however,  is  the  Mexican  International. 

"  The  Minister  of  Communications  has  made  great  improvement 
in  bringing  about  a  consolidation  and  connection  of  all  the  Federal 
telegraph  lines,  and  in  this  way  has  succeeded  in  establishing 
meteorological  observatories  all  over  the  country,  which  are  run  in 
connection  with  the  weather  bureau  and  are  proving  of  inestimable 
value  to  the  farmers,  who,  through  this  service,  receive  warning  of 
cold  snaps  and  temperatures  which  would  damage  their  crops. 

"  In  the  Department  of  Justice  and  Public  Instruction  there  has 
been  a  wonderful  development  in  the  increasing  of  schools,  which 
increase  has  amounted-  to  1,000  per  cent.,  or  about  ten  times  over 
what  they  were  ten  years  ago.  Public  instruction  in  Mexico  is 
enforced  by  all  the  Federal  authorities.  That  is,  the  education  of 
the  lower  class  of  citizens,  including  the  original  Indians." 

"  *  Do  you  think  the  United  States  should  acquire  control  of  the 
Philippines?'" 

"  In  my  opinion,  the  Philippine  Islands  would  give  the  United 
States  more  trouble  by  far  than  they  would  benefit  her.  The 
insurgents  will  always  give  trouble.  They  will  fight  forever  and 
will  never  submit  to  American  domination." 

Sec.  325.  The  advantages  which  Mexico  derives  from 
a  silver  standard  are  very  clearly  and  forcibly  shown  in 
an  editorial  published  in  El  Mundo  of  February  10,  1899, 
from  which  I  quote  the  following: 

We  have  always  maintained,  and  tried  to  prove  on  several 
occasions,  that  the  fall  in  the  value  of  silver  is  the  cause  of  the 
unprecedented  growth  and  prosperity  of  those  countries  using  it  as  a 
national  currency. 


MEXICO  AND  SILVER  MONEY  185 

Our  contention  was  based  upon  solid  reasoning  and  a  mass  of 
important  facts.  Tiie  depreciation  in  the  value  of  silver  is  a  premium 
on  exportation,  and,  consequently,  on  the  products  of  silver  coun- 
tries. With  silver  at  par,  effects  worth  a  dollar  gold  abroad  are 
worth  a  dollar  silver  to  the  exporter;  but  if  silver  falls,  the  exporter 
receives  the  same  dollar,  in  gold,  or  a  dollar  and  a  half,  two  dollars, 
or  more,  as  the  case  may  be,  in  silver.  Hence  the  establishment  of 
new  industries,  the  culture  of  new  crops,  the  exportation  of  addi- 
tional products  and  on  a  greater  scale;  hence,  also,  the  immigration 
of  capital  and  labor,  the  increase  of  public  revenue,  and,  in  short, 
prosperity  in  every  sense. 

The  facts  which  corroborate  this  contention  are  public  and  noto- 
rious, and  in  Asia,  Africa,  and  nearly  the  whole  of  Latin  America, 
both  exportation  and  production  have  increased  to  such  an  extent  as 
to  alarm  those  old  countries  which  adhere  to  the  gold  standard,  and 
seriously  jeopardize  the  industrial  monopoly  of  the  old  world. 

Time  has  added  another  striking  proof  of  the  correctness  of  this 
reasoning  and  the  facts  deduced,  a  proof  which  should  be  analyzed 
in  order  to  disillusionize  a  number  of  people  of  the  idea  that  the 
country  would  be  better  off  on  a  gold  footing  and  that  everything 
possible  should  be  done  to  raise  the  white  metal  from  the  state  of 
decay  into  which  it  has  fallen. 

This  new  fact  tends  to  show  that  the  enormous  prosperity 
enjoyed  by  certain  countries  having  a  silver  or  paper  currency,  has 
been  interrupted  and  daily  threatened  with  destruction  in  proportion 
as  the  premium  on  gold  has  decreased.  Following  the  advice  of  the 
monometallists,  Chile  and  the  Argentine  have  made  an  effort  to 
raise  the  value  of  the  national  paper  currency  to  the  level  of  gold. 
With  this  object  in  view  loans  have  been  floated  for  the  purpose  of 
retiring  paper  from  circulation,  and  returning  little  by  little  to  the 
gold  standard.  This  monetary  policy  has  resulted  in  the  premium 
on  gold  decreasing,  and  it  is  believed  that  in  time  a  permanent  gold 
currency  can  be  established. 

We  give  below  a  narrative  of  the  disastrous  results  which  these 
measures  have  produced  in  the  Argentine  Republic,  according  to  a 
letter  written  by  the  Argentine  economist,  Silvio  Gesell,  to  "  The 
European  Economist: " 

"Naturally,  this  rise  in  the  value  of  the  national  monetary  unit, 
is  offset  by  a  general  fall  in  all  prices,  and  it  is  curious  and  at  the 
same  time  sad  to  observe  how  all  the  bimetallistic  theories  concern- 
ing the  fall  in  prices,  are  here  fully  confirmed. 


186  BIMETALLISM 

"  Everything  declines.  Intelligent  artisans  emigrate,  whilst 
immigration,  which  reached  the  figure  of  15,000  persons  per  annum, 
has  dwindled  to  almost  nothing.  The  most  extraordinary  industrial 
competition  prevails.  The  supply  in  all  branches  of  trade  exceeds 
the  demand,  whilst  nobody  thinks  of  starting  new  industries. 
Fiscal  returns  of  all  kinds  are  decreasing  'TO  AN  ALARMING 
EXTENT,'  and  this  pitiful  state  of  the  public  revenue  only  faintly 
reflects  the  general  economic  state  of  affairs. 

"  The  same  monetary  policy  has  been  followed  in  Chile,  with  the 
same  result,  with  this  difference,  that  as  the  methods  employed  have 
been  more  vigorous,  things  have  reached  a  pass  there  (July,  1898) 
which  we  shall  reach  in  a  year  or  two,  namely,  the  "  Krack." 
Last  month  a  state  of  things  was  reached  in  Chile,  where  all 
exchange  and  all  remuneration  for  work  became  materially 
impossible,  and  the  Government  was  compelled,  by  the  force  of 
circumstances,  to  again  put  into  circulation,  at  a  single  stroke,  all 
the  paper  which  it  had  patiently  and  at  such  enormous  sacrifices, 
retired  during  the  last  few  years." 

The  Republic  of  Chile,  after  having  decided  to  adopt  the  gold 
standard  on  February  11,  1895,  and  having  in  January,  1898, 
recommenced  payment  in  specie,  has  suddenly  been  compelled  to 
suspend  monetary  reform,  in  view  of  the  economic  confusion,  as 
unfortunate  as  unforeseen,  brought  about  by  the  retirement  of  the 
depreciated  coin  from  circulation. 

The  foregoing  gloomy  picture  contrasts  strongly  with  the  flourish- 
ing economic  and  financial  situation  of  this  country.  Neither 
capital  nor  labor  is  emigrating  from  Mexico;  indeed,  the  contrary  is 
the  case,  and  both  are  flowing  into  the  country  en  masse  sure  of 
remunerative  returns.  Mexico  is  the  scene  of  no  industrial  strikes, 
nor  has  she  to  limit  her  products;  on  the  contrary,  new  factories  are 
springing  up  and  new  lands  are  being  brought  under  cultivation. 
Mexico  knows  no  decrease  in  her  revenues,  no  deficits  in  her 
budgets  and  no  waning  credit,  but  a  surplus  on  hand.  State  values 
almost  at  par  and  solvency  complete.  The  monetary  horizon, 
gloomy  in  Chile  and  the  Argentine,  is  bright  in  this  Republic,  all 
because  we  have  refused  to  be  seduced  and  hurried  along  by  perni- 
cious innovations;  we  have  known  how  to  preserve  our  monetary 
system  and  turn  the  premium  on  gold  to  account  in  developing  our 
own  manufactures. 

Fortunately  there  are  no  longer  any  visionary  partisans  of  the 


MEXICO  AND  SILVER  MONEY  187 

gold  standard  in  the  country  nor  illusions  with  respect  to  the 
advantages  of  a  pound  sterling  currency;  but  should  the  occasion 
arise,  we  shall  confront  all  deluded  persons  with  the  examples  of 
Chile  and  the  Argentine,  both  as  a  lesson  and  a  warning. 

Sec.  326.  I  quote  from  the  Mexican  Herald  of  January 
17,  1899,  the  following  paragraph: 

"The  great  activity  noticeable  here  in  the  installation  of  new 
cotton  mill  machinery,  many  of  the  older  mills  replacing  their  plant, 
is  a  most  gratifying  sign  of  these  prosperous  times.  Quite  a 
number  of  mills  are  compelled  by  the  increase  of  business  to  enlarge 
their  premises.  And  this  is  in  a  country  committed  to  the  fatal 
silver  basis,  a  '  poor  miserable  country '  which  pays  gold  interest 
on  its  six  per  cent,  bonds,  and  sees  them  standing  at  par  and  far 
ahead  of  the  securities  of  other  Latin-American  nations  which  have 
adopted  the  prosperity-evoking  gold  standard.  Mexico  offers  to  the 
world  the  spectacle  of  a  daily  refutation  of  closet  theories  of  finance, 
a  busy  and  progressive  nation  which  meddles  with  no  other  country, 
is  content  with  its  imperial  domain,  its  vast  variety  of  resources, 
and  best  of  all,  earnestly  desires  peace." 

Sec.  327.  Senor  Don  Matias  Romero,  for  many  years 
Ambassador  Extraordinary  and  Minister  Plenipotentiary 
from  Mexico  to  the  United  States,  in  1898  published  a 
book  entitled  **  Mexico  and  the  United  States,"  on  page 
570  of  which  he  quotes  with  approval  an  extract  from  a 
book  published  in  1897  by  the  **  Mexican  Central  Rail- 
way Company  Bureau  of  Information,"  entitled  "Facts 
and  Figures  about  Mexico."  I  reproduce  this  quotaton 
which  is  in  the  following  words: 

"  Causes  of  Prosperity— While  Mexico's  prosperity  is  unquestion- 
ably due  to  a  large  number  of  causes,  prominent  among  which  are 
the  suppression  of  disorder,  the  extension  of  railroads,  and  the 
liberal  policy  of  the  Government  to  foreign  capitalists,  it  is  very 
evident  that  her  industrial  growth  has  been  powerfully  stimulated 
by  the  existing  monetary  standard. 

*'  When  silver  and  gold,  as  valued  in  the  world's  commodities, 
parted  company,  and  Mexican  dollars  (which  were  being  exported 
to  Europe)  were  sold  for  a  less  price  as  measured  in  the  currency  of 


188  BIMETALLISM 

the  gold  standard  countries,  a  rise  in  the  price  of  all  imported 
articles  began  in  Mexico.  From  this  time  dates  the  development  of 
Mexico's  cotton  and  woollen  industries,  as  well  as  the  increase  in 
the  exportation  of  articles  other  than  precious  metals.  The  demand 
and  the  margin  of  profits  for  made-made  goods  increased  as 
Mexican  dollars  depreciated.  The  native  manufacturer  enlarged 
his  operations,  introduced  improved  machinery,  and  began  to 
compete  successfully  with  many  grades  of  imported  goods. 

"  The  consumer  now  purchases  from  the  Mexican  manufacturer 
at  the  same  price  in  silver  as  when  silver  was  at  a  par  with  gold, 
instead  of  being  exported  to  Europe,  as  formerly.  Many  millions  of 
dollars  have  thus  been  kept  at  home  and  added  to  the  capital  of  the 
country. 

"  Cotton  mills  have  been  constructed  in  all  parts  of  the  Republic. 
The  acreage  of  cotton  is  constantly  increasing,  but  the  native  crop 
is  not  yet  sufficient  to  supply  the  demand,  and  large  quantities  of 
cotton  are  imported  from  the  United  States. 

"  The  history  of  the  woollen  trade  has  been  almost  identical  with 
that  of  cotton. 

"  The  Mexican  manufacturer  of  woollens  produces  now  a  very 
good  article,  although  he  cannot  yet  compete  with  the  finer  fabrics  of 
France  and  England.  In  former  years  there  was  a  considerable 
exportation  of  wool  to  the  United  States;  now  there  is  a  considera- 
ble importation  of  it  from  the  United  States  into  Mexico. 

''While  it  is  true  that  that  the  Mexican  dollar,  as  measured  in 
francs,  marks,  or  pounds  sterling,  has  decreased  in  value  nearly  SO 
per  cent.,  it  is  also  true  that  prices  of  almost  every  class  of  foreign 
goods  have  also  decreased  50  per  cent.  A  suit  of  clothes  made 
from  the  finest  quality  of  imported  goods  costs  only  the  same 
number  of  Mexican  silver  dollars  to-day  that  it  cost  twenty-five 
years  ago. 

"Note  also  the  effect  on  real  estate.  Coffee  plantations  have 
risen  in  value  from  $75  or  $80  an  acre,  the  price  when  gold  was  at 
par  with  silver,  to  from  $200  to  $800  an  acre.  The  annual  profits 
of  these  plantations  have  risen  from  $10  or  $15  an  acre  to  from  $50 
to  $150  an  acre.  Similar  advances  are  true  also  in  sugar  and 
tobacco  haciendas. 

"  The  premium  on  gold  has  been  the  cause  of  immense  internal 
improvements  throughout  the  country.  The  capital  kept  at  home 
has  been  invested  in  irrigation  schemes,  in  improving  large  tracts 
of  fallow  land,  and  in  other  enterprises  of  a  like  character.    The 


MEXICO  AND  SILVER  MONEY  189 

premium  has  also  brought  much  foreign  capital  here,  which  has 
been  invested  in  various  branches  of  industry,  particularly  in  the 
production  of  articles  for  exportation. 

"  The  foreign  investor  doubles  his  capital  when  he  brings  it  to 
Mexico.  He  gets  the  advantage  of  cheap  and  docile  labor  for  silver, 
and  sells  his  exported  products  for  gold. 

*'  This  great  stimulation  to  all  industrial  enterprises,  the  building 
of  railroads,  the  establishment  of  factories,  and  the  cultivation  of 
thousands  of  acres  of  land— all  these  have  had  a  notable  effect  upon 
the  people.  The  great  demand  for  labor  has  benefitted  them 
immensely,  and  has  promoted  peace  and  prosperity  throughout  the 
country. 

"  The  resources  and  opportunities  of  Mexico  have  only  been 
recently  revealed  to  her  own  people,  as  well  as  to  foreigners.  It  is 
much  easier  now  than  it  ever  was  before  to  get  capital  here  at  a 
relatively  low  rate  of  interest  for  any  legitimate  enterprise,  because, 
first,  there  is  more  money  in  the  country  than  when  we  were 
importing  so  largely;  and  because,  secondly,  the  business  man  is 
willing,  under  present  conditions,  to  take  risks  which  would  be  con- 
sidered too  great  in  an  era  of  low  prices  and  a  contracted  currency. 

"  The  native  producer  has  prospered  under  silver  at  the  expense 
of  the  foreign  merchant  and  of  the  importer.  Silver  in  Mexico  has 
stimulated  exports  and  contracted  imports." 

Sec.  328.  I  also  quote  from  Romero's  book,  page  528, 
a  paragraph  on  Mexican  wages  and  silver  which  is  in 
the  following  words: 

"MEXICAN  WAGES  AND  SILVER  — The  impression  generally 
prevails  in  this  country  that  Mexican  wages  are  reduced  to  one-half 
of  their  old  amount  in  consequence  of  the  depreciation  of  silver, 
reasoning  that  if  wages  were  twenty-five  cents  a  day,  for  instance, 
when  silver  was  on  a  par  with  gold  at  the  ratio  of  16  to  1,  now  that 
it  has  declined  about  100  per  cent.,*  wages  of  twenty-five  cents  in 
silver  are  equivalent  to  twelve  and  a  half  cents  in  gold,  and  that 
wages  not  having  increased  in  the  same  proportion  that  silver  has 
depreciated,  the  result  must  be  that  they  have  been  reduced  one- 
half.    This    is  a  mistaken  conclusion.      In    an    article    which    I 


*  The  words  "100  per  cent."  are  unquestionably  a  typographical  error  or  a  slip 
the  pen,  as  50  per  cent.,  or  one-half,  was  unquestionably  meant. —  A.  J.  U 


190  BIMETALLISM 

published  in  the  "  North  American  Review,"  of  June,  1895,  I 
explained  the  results  of  the  silver  standard  in  Mexico,  and  showed 
that  the  purchasing  power  of  the  silver  dollar  remains  there  the 
same  as  it  was  when  silver  was  on  a  par  with  gold,  in  so  far  as 
Mexican  commodities  and  services  are  concerned,  and  that  prices 
have  only  increased  somewhat  for  imported  articles,  or  for  such 
Mexican  products  as  have  their  prices  regulated  in  foreign  markets. 
I  refer,  therefore,  the  reader  to  that  article,  which  will  be  found  in 
this  volume,  and  here  I  will  only  say  that  W4THIN  THE  BOUNDA- 
RIES OF  MEXICO  THERE  HAS  BEEN  NO  SUCH  THING  AS  A 
DEPRECIATION  OF  SILVER,  AS  SILVER  HAS  MAINTAINED  ITS  OLD 
LEVEL  WITH  REGARD  TO  COMMODITIES.  IT  PURCHASES  AS 
MUCH  NOW  AS  IT  DID  BEFORE  ITS  DECLINE  IN  VALUE  RELATIVE 
TO  GOLD  BEGAN.  It  pays  for  as  much  labor  as  before,  and  in  the 
hands  of  the  laborer  it  purchases  as  much  of  the  necessaries  of  life. 
It  is  only  in  connection  with  imports  that  the  premium  on  gold  or 
the  decline  in  silver  has  caused  an  advance  in  price.  But  the 
laboring  population  purchases  little  that  is  imported,  and  so  whether 
imported  goods  cost  more  or  not  is  of  little  or  no  consequence  to 
persons  of  that  class.  In  many  cases  even  the  price  of  imported 
articles  has  not  enhanced,  notwithstanding  the  depreciation  of 
silver. 

"  Very  many  believe  that  the  low  rate  of  wages  in  Mexico  is  due 
to  the  depreciation  of  silver,  and  those  professing  this  opinion  are 
very  much  mistaken,  because  when,  thirty  years  ago,  silver  was  at 
a  par  and  even  at  a  premium  with  gold  at  a  ratio  of  16  to  1,  the 
wages  in  Mexico  were  lower  than  they  are  now,  and  the  Mexican 
laborer  was  not  so  well  off  as  he  is  today. 

"To  make  a  proper  investigation  about  the  condition  of  the 
Mexican  laborers  in  connection  with  the  money  standard,  it  would 
be  necessary  to  extend  that  investigation  to  gold  countries  such  as 
Spain,  Italy,  Germany,  Turkey,  etc.,  etc.,  so  as  to  see  to  what 
extent  the  money  standard  affects  the  prosperity  of  the  working 
classes.  I  think  that  the  standard  of  money  has  very  little  to  do 
with  the  condition  of  labor.  The  silver  standard  has  nothing  to  do 
with  their  reward;  they  would  earn  no  more,  in  proportion,  were  the 
country  on  a  gold  basis.  In  fact,  tens  of  thousands  of  them  would 
be  out  of  employment  by  reason  of  the  impossibility  of  competing 
with  the  workers  of  gold  standard  countries. 

"  Under  the  operation  of  the  gold  standard  farm  labor  received  three 
times  as  much  in  one  part  of  the  Union  as  it  did  in  another  part,  as  is 


MEXICO  AND  SILVER  MONEY  191 

shown  by  the  above  quoted  publication  of  the  Agricultural  Depart- 
ment, entitled,  'Wages  of  Farm  Labor  in  the  United  States.'  The 
fact  that  wages  in  each  State  were  ascertained  by  averages,  shows 
that  the  difference  between  the  best-paid  labor  and  the  poorest-paid 
labor  is  still  greater.  That  report  also  shows  that  in  the  United  States 
Caucasian  farm  labor  receives  more  than  three  times  as  much  as 
the  same  labor  receives  in  Germany,  although  both  countries  have  a 
gold  standard  and  a  protective  tariff.  (See  Special  Consular  Report 
1896  entitled  *  Money  and  Prices  in  Foreign  Countries,'  p.  263.) 

'*  Between  1816  and  1834  England  had  a  gold  standard  and  the 
United  States  a  double  standard,  with  silver  as  the  money  in  com- 
mon use,  and  laboring  men  were  better  off  here  than  in  England. 
Turkey  is  one  of  the  gold  standard  nations,  and  Japan,  until 
recently,  coined  silver  at  a  ratio  almost  identical  to  that  of  the 
United  States,  and  yet  the  progress  of  Japan  was  really  remarkable. 
All  this  shows  that  silver  is  not  the  cause  of  the  low  wages  of 
Mexico." 

Sec.  329.  I  will  make  one  more  quotation  from 
Romero  on  the  question  of  wages.  I  quote  from  the 
same  book,  page  521: 

"  It  is  a  fact  that  wages  in  Mexico  are  far  lower  in  many  instances 
than  those  paid  for  the  same  industries  in  the  United  States, 
although  sometimes,  that  is,  in  the  case  of  skilled  laborers,  they  are 
as  high  or  higher;  but  this  ought  not  to  appear  strange  when  it  is 
considered  that  this  country  pays  probably  the  highest  wages  in  the 
world;  not  even  the  foremost  manufacturing  nations  of  Europe,  as 
England,  France,  Germany,  and  Belgium,  being  equal  in  this 
regard.  Yet  while  it  is  true  that  labor  in  European  countries  is  not 
so  well  remunerated  as  in  the  United  States,  it  must  be  taken  into 
account  that  the  same  amount  of  labor  produces  there  less  than 
here.  I  am  assured  by  competent  persons  that  a  bank-bill  printer, 
for  instance,  does  not  print  in  England  more  than  1,000  sheets  per 
week,  while  the  average  work  done  by  the  American  workman  is 
6,000  sheets  per  week;  and  it  is  stated  in  the  "  Journal  des  Econo- 
mistes  "  that  a  French  weaver  can  take  care  of  only  four  looms, 
a  Belgian  of  five,  an  English  weaver  of  six,  and  one  from  this 
country  of  eight,  while  a  Mexican  weaver  cannot  attend  to  more 
than  two  looms. .  But  the  actual  production  during  a  given  working 
time  is  in  Mexico  far  less  than  in  the  United  States,  or  even  in 
Europe. 


192  BIMETALLISM 

"  The  day's  work  of  a  Mexican  laborer,  very  likely,  represents 
In  many  cases  only  one-fourth  of  what  is  accomplished  during  the 
same  time  by  a  laborer  in  the  United  States.  A  Mexican  laborer 
working  from  ten  to  eleven  hours  a  day,  for  instance,  accomplishes 
less  work,  or  produces  less,  than  a  European  or  an  American  laborer 
in  seven  or  nine  hours,  and  in  some  instances  the  disproportion  is  as 
great  as  one  to  five.  I  have  been  assured  that  a  Mexican  bricklayer 
in  eleven  hours'  work  does  not  lay  more  than  500  bricks,  while  a 
bricklayer  in  the  United  States  lays  2500  in  nine  hours.  Under 
such  conditions  the  high  wages  of  |3  a  day  paid  in  the  United  States 
are  no  higher  than  the  wages  of  50  cents  paid  in  Mexico,  so  far  as 
the  product  of  labor  is  concerned." 

Sec.  330.  Thomas  T.  Crittenden,  Consul  General 
from  the  United  States  to  Mexico,  in  his  Consular  Report 
written  in  1896  and  issued  from  the  Bureau  of  Statistics, 
Department  of  State,  Washington,  D.  C,  1896,  Volume 
XIII.  Part  1  (I  quote  from  pages  143,  144,  and  145),  said: 

"Wages  of  unskilled  labor  has  been  almost  unaffected  by  the 
premium  on  gold.  The  great  stimulation  of  all  enterprises,  the 
building  of  thousands  of  miles  of  railroads,  the  establishment  of 
numerous  factories,  and  the  bringing  under  cultivation  of  thousands 
of  acres  of  land,  has  given  employment  to  vast  numbers  of  men. 
This,  of  course,  has  had  its  effect  in  raising  wages  and  bettering 
the  condition  of  the  laboring  classes,  at  the  same  time  reducing  the 
revolutionary  spirit  that  heretofore  had  great  sway  in  this  country. 
It  has  been  a  most  difficult  matter  to  make  this  roving  class  of 
people,  by  whom  this  country  is  largely  populated,  think  and  believe 
that  prosperity  and  plenty  only  come  with  peace;  now  that  they 
understand,  with  but  few  exceptions  they  are  thoroughly  contented." 

Sec.  331.  Mr.  Crittenden,  after  explaining  the  diffi- 
culties he  had  labored  under  in  obtaining  reliable  informa- 
tion as  to  the  prices  of  many  commodities  as  far  back  as 
1873,  says: 

"  However,  it  is  a  fact  that  the  price  of  eatables  and  produce 
raised  here  and  consumed  by  the  natives,  such  as  'frijoles,'  'tortillas' 
and  'chiles,'  as  well  as  the  cheap  'manta'  (common  shirting),  hats 
and  zarapes,  have  not  changed.    Their  value  has  in  no  way  been 


MEXICO  AND  SILVER  MONEY  193 

affected  by  the  rise  and  fall  of  silver.  *  *  As  to  imported 
luxuries  and  fineries,  they  are,  when  the  difference  in  the  price  of 
silver  is  tai<en  into  consideration,  more  expensive  now  than  in  1873. 
However,  the  consumption  and  use  of  imported  articles  is  limited 
almost  entirely  to  the  rich  and  traveled  natives  and  foreigners." 

Sec.  332.  Consul  General  Crittenden  while  in  Kansas 
City,  Missouri,  in  May,  1895,  in  an  interview  published 
in  the  Star  of  that  city.  May  2,  1895,  stated  that  the 
purchasing  power  of  silver  money  in  Mexico  was  as  great 
or  very  nearly  as  great  as  the  purchasing  power  of  gold 
in  the  United  States.  I  quote  from  "  Mexico  and  the 
United  States, "page  529: 

"  Such  a  condition  exists,"  he  said,  "  but  the  explanation  is  yet  to 
be  found.  The  Mexican  dollar  is  worth  about  52  cents  in  American 
money,  but  I  can  buy  just  as  good  gloves  for  $1.50,  Mexican  money, 
in  Old  Mexico,  as  I  can  buy  anywhere  in  America  for  $1.50,  Ameri- 
can money.  On  one  of  my  trips  here  I  wore  a  very  good  suit  of 
clothes,  made  to  order  in  a  very  satisfactory  manner,  which  cost  me 
just  $12  in  the  Mexican  capital.  You  can  get  an  elegant  suit  of 
clothes  made  to  order  there,  in  the  best  style,  for  $35,  Mexican 
money.  Shoes  that  cost  $5  a  pair  here,  bring  $3  a  pair  there,  no 
matter  whether  they  were  made  in  Paris  or  in  Mexico.  A  very 
large  proportion  of  the  shoes  sold  in  that  country  come  from  France. 
They  seem  to  be  as  good  as  ours,  although  I  do  not  like  the  fit 
quite  so  well,  and  I  usually  buy  my  shoes  here.  What  seems 
remarkable  to  me  is  that  goods  of  American  manufacture  sell  for 
less  in  Mexico  than  in  the  United  States.  My  wife  does  most  of  the 
buying  and  from  her  1  learn  that  she  can  buy  the  finest  silk  under- 
wear—she bought  some  for  me  recently — for  25  per  cent,  less  in 
Mexico  than  in  this  country.  I  understand,  too,  that  the  Jaeger 
underwear  is  much  cheaper  there  than  in  American  cities.  I  don't 
pretend  to  account  for  it.  The  goods  are  made  in  New  York  and 
they  pay  a  high  duty,  certainly  not  less  than  25  per  cent,  ad  valorem, 
in  the  Mexican  port  of  entry. 

*'  My  wife  gets  the  finest  Irish  linen  for  fifty  cents  a  yard  in  Old 
Mexico.  In  fact,  we  buy  everything  in  the  clothing  line,  except 
shoes,  in  Mexico,  in  preference  to  buying  here,  as  goods  are  so 
much  cheaper  there. 

13 


194  BIMETALLISM 

'*  The  Mexicans  are  very  fond  of  jewelry,  and  get  it  very  mucti 
cheaper  than  we  do.  There  are  jewely  stores  in  the  City  of  Mexico 
finer  than  any  that  1  ever  saw  in  an  American  city.  Last  winter 
one  of  the  Lucases  of  St.  Louis — James  Lucas,  I  believe — made  a 
trip  around  the  world,  and  finally  reached  the  City  of  Mexico.  His 
daughter  was  with  him.  While  in  Paris  the  young  woman  saw  a 
very  fine  gold  watch,  which  she  wanted.  The  price  there  was 
$225  in  American  money,  and  her  father  decided  not  to  buy  it. 
When  they  reached  Mexico  she  saw  an  exact  duplicate  of  the  watch 
she  had  seen  in  Paris,  and  again  asked  her  father  to  buy  it.  They 
inquired  the  price  and  found  it  was  $225  in  Mexican  money,  or 
just  half  the  price  asked  by  the  Parisian  jeweler.  Mr.  Lucas 
offered  his  check  and  referred  the  jeweler  to  me.  Now  why  such  a 
piece  of  jewelry  should  be  sold  in  Mexico  for  half  the  price  asked  in 
Paris,  I  don't  know,  nor  can  I  explain  why  American-made  goods 
should  sell  for  less  there  than  in  St.  Louis  or  Kansas  City,  but  it 
is  a  fact." 

Sec.  333.  The  key  for  the  solution  of  this  mystery 
will  be  found  in  **  Trusts"  and  **  Protective  Tariffs." 
Trusts,  syndicates  and  combines  now  control  the  produc- 
tion of  more  than  three  hundred  articles  of  every  day 
use,  articles  of  absolute  necessity,  extending  from  the 
cradle  in  which  the  infant  child  is  lulled  to  sleep  to  the 
cofifm  which  receives  the  remains  of  the  gray  haired  man 
when  life's  journey  is  over.  Many  of  these  trusts  are 
international,  embracing  the  entire  Western  World. 
(For  a  partial  list  of  trusts,  at  least  those  in  existence  in 
1894,  and  the  articles  controlled  by  them  see  Appendix 
to  "Wealth  vs.  Commonwealth,"  a  very  excellent  book 
by  Henry  D.  Lloyd,  published  by  Harper  &  Brothers 
in  1894). 

Sec  334.  The  price  we  are  required  to  pay  for  articles 
so  controlled  has  no  economic  significance  whatever, 
it  is  not  regulated  by  the  ordinary  course  of  the  law 
of  supply  and  demand,  but  by  the  arbitrary  will  of  the 
men  who  control  the  trust.     And  when  trusts  are  aided 


MEXICO  AND  SILVER  MONEY  195 

by  a  so-called  **  protective  tariff"  which  virtually 
prevents  the  introduction  of  foreign  goods  in  competition 
with  goods  produced  by  the  trust  they  become  omnipotent.  ■ 
They  increase  or  diminish  the  output  at  pleasure,  and  in 
fixing  the  price  of  the  commodity  so  produced  and  so 
protected,  the  greed  of  the  trust  and  the  necessities  of  the 
people  are  the  controlling  elements.  The  cost  of  produc- 
tion does  not  enter  into  the  calculation.  If  the  supply  is 
greater  than  the  demand  at  the  price  fixed  the  production 
ceases  until  the  necessities  of  the  people  compel  them  to 
purchase  at  the  price  demanded. 

Sec.  335.  When  the  revenue  laws  are  of  such  a 
character  as  to  virtually  prevent  the  importation  of 
foreign  goods  in  competition  with  those  produced  by  a 
trust,  the  trust  can  fix  any  price  it  pleases  and  the  people 
must  submit  no  matter  how  extortionate.  But  when  a 
trust  sends  its  goods  to  a  foreign  country  it  must  there 
compete  with  foreign  producers.  While  at  home  it  may 
with  impunity  rob  consumers,  it  must  in  foreign  countries 
sell  at  a  fair  price.  This  explains  how  certain  com- 
modities produced  in  the  United  States  can  be  sent  to 
Mexico  and,  after  paying  an  import  duty  to  the  Mexican 
Government,  commissions  to  agents,  freight  charges,  etc., 
etc.,  sell  the  goods  in  Mexico  for  one-half  of  the  price 
demanded  and  received  in  this  country. 

Sec.  336.  There  is  no  diversity  of  opinion  in  Mexico 
on  the  silver  question.  During  my  investigation  in 
Mexico  I  interviewed,  probably,  not  less  than  one 
hundred  prominent  men  among  whom  were  Government 
oificials,  railroad  officials,  merchants,  manufacturers, 
bankers,  coffee  planters,  cotton  planters,  newspapermen, 
lawyers,  doctors,  hotel  proprietors,  etc.,  etc.,  and  I  found 
but  one  gold  standard  advocate  and  he  was  not  a  Mexican 
but  an  American  now  employed  in  a  clerical  position  in 


196  BIMETALLISM 

the  City  of  Mexico.  I  will  not  say  that  there  is  not  a 
Mexican  in  the  Republic  that  favors  a  gold  standard  but 
I  will  say  that  after  diligent  search  for  two  months  I 
failed  to  find  one.  All  the  talk  in  this  country  about  the 
probability  of  Mexico  adopting  a  gold  standard  has  no 
foundation  in  fact  whatever.  It  is  universally  believed 
in  Mexico  that  the  present  wonderful  development  of  the 
country  and  the  general  prosperity  of  the  people  is  largely 
owing  to  their  abundant  cheap  silver  money  and  they 
have  no  intention  of  adopting  a  gold  standard. 

Sec.  337.  While  in  the  City  of  Mexico  I  had  a  con- 
versation with  the  president  of  a  prominent  bank  in  that 
city  and  after  he  had  declared  in  very  positive  terms  his 
belief  that  Mexico  owed  her  present  prosperity  very 
largely  to  her  abundant  and  cheap  silver  money  and  that 
it  would  be  suicidal  for  Mexico  to  adopt  a  gold  standard, 
I  expressed  my  surprise  to  hear  such  a  declaration  from 
the  president  of  a  bank,  as  bank  officials  in  the  United 
States  were  almost  without  exception  gold  standard 
advocates.  He  replied  that  banking  in  Mexico  is  quite 
different  from  banking  in  the  United  States;  that 
loaning  money  and  discounting  bills  is  not  the  exclusive 
business  of  a  Mexican  banker;  that  the  Mexican  banker 
is  also  an  investor;  that  many  of  the  banks  in  Mexico 
are  largely  interested  in  manufacturing  and  other  indus- 
tries, and  like  other  business  men  are  interested  in  the 
general  development  of  the  country  and  that  consequently 
they  were  ready  and  willing  to  favor  a  financial  policy 
that  would  produce  the  best  results  for  the  country  and  for 
the  people  generally.  He  said  that  Mexico  did  not  want 
a  gold  standard,  that  so  long  as  she  could  produce  on  a 
silver  basis  and  sell  her  exports  whether  manufactured 
articles,  or  agricultural  or  mineral  products  for  gold  and  in 
so  doing  pocket  the  premium  on  the  gold,  she  would 
remain  satisfied  with  the  present  financial  situation. 


MEXICO  AND  SILVER  MONEY  197 

Sec.  338.  Romero  in  his  recent  publication  herein- 
before quoted  from  (page  576)  in  discussing  the  monetary 
situation  in  Mexico,  says: 

"  Everybody  in  Mexico,  that  is,  from  the  educated  to  the  ignorant, 
from  the  rich  to  the  poor,  from  the  natives  to  the  foreigners,  and 
even  the  bankers,  who  in  other  countries  are  decidedly  favorable  to 
the  gold  standard,  are  all  in  favor  of  silver.  The  Government 
holds  the  same  opinion.  As  Mexico  is  now  prosperous  a  large 
portion  of  the  people  attribute  its  prosperity  to  the  silver  standard, 
and  are  therefore  decidedly  favorable  to  the  continuance  of  that 
standard. 

"  It  is  not  strange  that  Mexicans  think  so  when  prominent  and 
able  foreigners  living  there  hold  the  same  opinion. 

"  Mr.  Lionel  E.  G.  Garden,  the  very  able  British  Consul  at  the 
City  of  Mexico,  who  has  been  In  Mexico  for  nearly  eighteen  years 
and  understands  the  country  well,  has  expressed  official  views  on 
this  subject  which  go  much  further  than  my  own.  He  holds  that, 
while  the  first  effects  of  the  depreciation  of  silver  on  the  Mexican 
Government  and  on  the  Mexican  railroads  were  unfavorable,  the 
ultimate  result  will  be  beneficial  and  will  tend  to  increase  the 
country's  agricultural  resources  and  consequently  the  republic's 
export  trade,  provided  that  a  price  shall  be  arrived  at  not  subject  to 
fluctuations;  and  that  the  greatest  disadvantages  that  the  Mexican 
Government  and  railways  suffer  from  the  depreciation  are  therefore 
the  constant  fluctuations  in  the  market  price  of  silver.  Mr. 
Garden's  views  appear  in  a  report  on  the  effect  of  the  depreciation 
of  silver  in  Mexico,  addressed  to  Lord  Rosebery  on  August  4,  1893. 

"Mr.  Garden  in  a  later  report  to  the  Foreign  Office  on  the  trade 
of  Mexico  in  1895  attributes  to  the  depreciation  of  silver  the 
expansion  of  that  trade  and  of  the  general  prosperity  of  the  country 
as  follows: 

" '  This  favorable  condition  of  things  must  be  attributed  in  great 
measure  to  the  stimulus  afforded  to  the  development  of  the  agri- 
cultural resources  of  the  country  by  the  depreciation  of  silver,  which, 
far  from  being  prejudicial,  has  proved  to  be  the  greatest  benefit  to 
Mexico,  as  I  predicted  it  would  in  my  report  on  that  subject  of 
August,  1893.'" 


198  BIMETALLISM 

Sec.  339.  While  in  Mexico  1  had  a  very  interesting 
interview  with  Mr.  Garden  and  he  explained  to  me  why 
there  had  been  so  little  rise  in  Mexico  in  the  price  of 
imported  goods.     Mr.  Garden  said: 

"  1  have  been  Consul  for  Great  Britain  in  Mexico  for  sixteen 
years,  and  1  have  made  a  careful  study  of  the  conditions  prevailing 
during  that  time.  The  silver  money  now  in  use  in  Mexico  will  go 
as  far  in  support  of  the  family  of  the  laborer  as  it  would  when  gold 
and  silver  were  of  equal  value  at  the  coinage  ratio  for  all  com- 
modities produced  in  Mexico.  Imported  articles  cost  more  but  not 
so  much  more  as  would  naturally  be  supposed.  There  are  two 
reasons  for  this:  (1)  Most  articles  now  imported  from  gold  standard 
countries  have  fallen  in  value  in  those  countries  (either  from 
improved  methods  of  production  or  from  some  other  cause),  and  (2) 
Import  duties  being  paid  in  silver  actually  amount  (as  measured  by 
gold)  to  but  one-half  what  they  did  before.  For  example,  suppose 
we  imported  a  commodity  costing  $100,  and  that  the  duty  was  |80; 
formerly  the  duty  being  paid  in  gold,  or  in  silver  of  equal  value,  the 
cost  of  the  commodity,  exclusive  of  transportation,  laid  down  in 
Mexico  would  be  $180.  Now  the  same  commodity  can  in  all 
probability  be  purchased  in  Europe  or  the  United  States  for  two- 
thirds  the  former  price,  say  $66.  The  duty  still  remains  $80,  but 
this  being  paid  in  silver,  which  is  now  worth  as  measured  by  gold 
but  fifty  cents  on  the  dollar,  the  import  duty  would  amount  to  $40 
only,  gold  valuation,  instead  of  $80  as  formerly.  This  $40  duty 
being  added  to  the  $66  cost  we  find  that  the  commodity  formerly 
costing  $180,  now  costs  but  $106,  and  consequently  can  be  sold  for 
silver  at  a  slight  advance  only  on  the  former  cost.  Some  imported 
goods  are  sold  in  Mexico  today  for  less  silver  money  than  they 
formerly  brought  in  gold,  but  most  imported  goods  when  measured 
by  silver  are  somewhat  higher  than  formerly. 

"  Labor  is  well  employed.  There  is  work  for  all  that  want  work. 
Employers  are  seeking  laborers,  not  laborers  seeking  employment. 
Wages  have  not  advanced  materially  since  I  have  been  in  Mexico, 
except  in  special  localities  and  for  special  work,  such  as  railway 
construction,  etc.  The  special  localities  I  refer  to  are  mostly  in  the 
hot  country  where  labor  has  always  been  more  highly  paid.  The 
great  increase  in  the  cultivation  of  tropical  products  has  caused  an 
increase  in  the  demand  for  laborers  and  a  consequent  increase 
in  wage." 


MEXICO  AND  SILVER  MONEY  199 

Sec.  341.  During  my  conversation  with  Mr.  Garden 
and  in  illustration  of  the  statement  that  even  imported 
goods  could  be  purchased-  in  Mexico  for  the  same,  or  for 
nearly  the  same,  amount  of  the  so-called  depreciated  silver 
money,  as  was  formerly  paid  when  gold  and  silver  were 
of  equal  value  at  the  coinage  ratio,  Mr.  Garden  asked  me 
what  the  shoes  I  was  then  wearing  cost  me  in  the  United 
States.  I  had  on  a  pair  of  congress  gaiters  that  I  pur- 
chased in  Los  Angeles  for  which  I  paid  five  dollars  and  I 
so  informed  him.  Mr.  Garden  had  on  a  pair  of  gaiters 
very  similar  in  appearance.  Placing  his  foot  alongside  of 
mine  he  said:  **  What  do  you  suppose  I  paid  for  these 
gaiters?  They  were  made  in  France,  were  imported  to 
this  country  and  I  purchased  them  in  this  city  and  paid 
for  them  with  Mexican  silver  money.'*  1  answered  that 
I  presumed  that  he  paid  about  ten  dollars.  He  replied 
that  he  paid  just  four  Mexican  silver  dollars  for  them,  and 
that  four  dollars  was  the  ordinary  retail  price  in  Mexico 
for  such  shoes,  and  *'  I  think,"  said  he,  **  they  are  as  good 
as  yours." 

Sec.  342.  In  support  of  Mr.  Romero's  statement  that 
even  the  bankers  in  Mexico  are  loyal  to  the  cause  of  silver, 
I  quote  a  paragraph  from  an  editorial  in  the  Mexican 
Herald  of  November  4,  1897,  entitled  "  Mexican  Bankers 
and  Silver:" 

"Why  are  our  great  bankers  so  loyal  to  the  cause  of  silver? 
Why  are  they  not  gold  monometallists  as  are  the  bankers  of 
England,  the  United  States,  and  the  continent  of  Europe?  It  is 
because  they  are  not  merely  bankers;  they  are  heavy  investors  and 
directors  in  new  manufacturing  industries  dependent  for  their 
prosperity  on  the  continued  use  of  silver  as  money  in  this  country 
They  take  a  broader  view  of  the  currency  situation  than  do  bankers 
abroad,  because  they  are  factors  in  the  great  manufacturing 
movement,  which  has  for  its  ultimate  purpose  the  achievement  of 
Mexico's  industrial  independence.    Being  something  more  than  the 


200  BIMETALLISM 

lenders  of  money,  they  are  liberal  in  their  ideas  and  are  not  blinded 
by  prejudice.  They  can  see  all  sides  of  the  currency  question. 
There  are  many  able  and  sagacious  men  among  the  bankers  of 
Mexico  and  they  are,  with  hardly  an  exception,  bimetallists.  They 
are  not  trying  to  make  money  dear,  they  are  not  wrecking 
properties — rather  are  creating  industries." 

Sec.  343.  I  quote  from  The  Trader  (a  Mexican  monthly 
journal)  May  number,  1898,  the  following  paragraph: 

"  Mr.  John  W.  Grant,  president  of  the  Traders'  Bank  at 
Evansville,  Indiana,  after  returning  home  from  his  recent  visit  to  this 
republic,  said:  '  Everything  is  prosperous  in  Mexico,  and  after  five 
years  of  crop  failures  and  a  constant  decline  in  silver,  the  money  of 
the  country,  I  can  say  positively  that  there  is  no  financial  trouble 
anywhere  and  no  failures  in  business  worth  mentioning;  the 
Government  met  the  interest  on  the  national  debt,  all  the  shops  are 
full  of  customers,  and  every  one  from  the  highest  in  the  land  down 
to  the  lowest,  is  full  of  admiration  and  love  for  President  Diaz.' 
Such  an  admission  from  a  banker  must  be  very  galling  to  those 
savants  who  have  been  so  zealously  advocating  the  gold  standard 
for  the  United  States,  using  as  premises  the  false  representations  of 
the  newspapers  of  that  country  concerning  conditions  here." 

Sec.  344.  In  an  interview  with  Gabriel  Morton,  Vice- 
President  Mexican  National  Railroad,  Mr.  Morton  said: 

"  I  have  been  in  Mexico  seven  years.  This  country  is  in  a 
prosperous  condition  and  is  being  rapidly  developed.  Manufactories 
are  being  established  all  over  the  country,  and  generally  are  being 
run  to  their  utmost  capacity,  and  are  making  money.  The 
condition  of  the  skilled  workman  has  been  greatly  improved.  He  is 
receiving  better  wages,  and  now  has  constant  employment,  at  least 
an  opportunity  for  constant  employment.  There  is  a  cohstant 
demand  for  all  available  workmen.  In  this  country  it  is  the 
employer  seeking  the  workman,  not  the  laborer  seeking  employ- 
ment, as  in  some  other  countries. 

"  Question — You  say,  Mr.  Morton,  that  the  skilled  workman  is 
receiving  better  wages  than  formerly?  Is  he  not  being  paid  in 
depreciated  silver  money  worth  only  50  cents  on  the  dollar? 

"Answer— He  receives  his  pay  in  Mexican  silver  dollars,  but 
whether  those  silver  dollars  are  depreciated  or  not  depends  upon 


MEXICO  AND  SILVER  MONEY  201 

what  you  measure  them  with.  It  is  true  that  the  silver  that  he 
receives,  if  exchanged  for  gold,  would  only  buy  about  one-half  the 
quantity  of  gold  it  formerly  would  buy,  but  if  exchanged  for 
"frijoles,"  "tortillas"  and  "chiles,"  upon  which  he  lives,  and  for 
the  cheap  "  manta  "  and  "  sarapes  "  with  which  he  clothes  himself, 
it  has  not  depreciated.  It  will  buy  as  much  of  the  necessaries  of 
Mexican  life  as  it  ever  would.  It  is  true  that  the  prices  of  imported 
commodities  are  higher  in  this  country  than  they  were  twenty  or 
twenty-five  years  ago,  but  the  rise  in  price  of  imported  goods  does 
not  affect  the  ordinary  laborer,  for  he  does  not  buy  imported  goods. 
There  have  been  considerable  fluctuations  in  the  price  of  corn, 
beans,  peas,  etc.,  the  ordinary  diet  of  the  poorer  class  of  Mexicans, 
since  I  have  resided  in  Mexico,  but  such  fluctuations  have  been 
occasioned  by  short  or  abundant  crops,  and  in  no  sense  have  they 
been  influenced  by  the  divergence  between  the  commodity  values 
of  gold  and  silver. 

"Question — Do  you  think  Mexico  would  be  benefitted  by  a  gold 
standard? 

"  Answer — I  do  not.  I  think  such  a  step  would  be  an  economic 
blunder  that  would  be  fatal  to  industrial  advancement  in  the  repub- 
lic. Mexico  is  today  the  most  prosperous  country  in  the  world,  all 
things  considered.  It  is  being  more  rapidly  developed,  more  rail- 
roads are  being  built,  more  manufactories  established,  more 
improvements  of  all  kinds  are  being  made  proportionately, 
especially  when  we  take  into  consideration  the  previous  conditions 
of  its  people,  than  in  any  other  country  in  the  world.  Japan  has 
tried  the  gold  standard  experiment,  and  it  has  resulted  in  checking 
materially  her  industrial  progress." 

Sec.  345.  While  in  Mexico  I  had  an  interview  with 
Mr.  Vail,  managing  editor  of  the  Two  Republics ^  in  which 
Mr.  Vail  said: 

"The  present  industrial  condition  in  Mexico  is  eminently  satis- 
factory. Wages  as  compared  with  wages  paid  ten  or  fifteen  years 
ago  have  advanced  considerably.  There  is  now  a  demand  for  all 
available  labor.  In  certain  parts  of  the  republic  Chinese  and  Japa- 
nese laborers  are  being  imported  owing  to  a  shortage  of  farm  labor. 
Silver  money  in  Mexico  will  buy  as  much  of  domestic  goods  as  it 
ever  would.  Some  classes  of  imported  goods  are  higher  than 
formerly  but  not  very  much  higher.    Manufacturing  industries  are 


202  BIMETALLISM 

in  a  high  state  of  prosperity.  Business  of  all  kinds  is  good  and 
business  failures  are  almost  unknown.  Exports  are  steadily  and 
rapidly  increasing.  The  general  impression  among  business  men 
and  Government  officials  is  that  Mexico  would  be  injured  by  a  gold 
standard.  The  high  price  of  gold  has  encouraged  exports  and 
discouraged  imports.  This  has  stimulated  the  establishment  of 
manufacturing  industries  and  encouraged  agriculture,  especially  the 
production  of  such  commodities  as  can  be  exported  and  sold  in  gold 
standard  countries.  In  fact  Mexico  enjoys  a  gold  valuation  on  a 
silver  basis." 

Sec.  346.  Mr.  Purdy,  manager  for  R.  G.  Dun  &  Co. 
in  the  Republic  of  Mexico  informed  me  that:  "  Business 
failures  in  the  sense  of  the  parties  going  into  bankruptcy 
and  quitting  business  very  seldom  occur  in  Mexico,  in 
fact  that  the  proportion  is  so  small  comparing  them  with 
failures  in  the  United  States  as  to  induce  one  to  almost 
say  there  are  practically  none." 

Mr.  Purdy  also  said:  "  I  have  no  hesitation  in  saying 
that  a  gold  standard  would  not  do  for  Mexico,  at  least  not 
at  present.  If  Mexico  should  adopt  a  gold  standard  it 
would  close  her  factories  and  paralyze  her  industries 
generally." 

Sec.  347.  Mr.  Hegewisch,  senior  partner  in  the  firm 
of  Hegewisch,  Fuss  &  Co.,  exporters  of  grain  and  other 
Mexican  products  and  a  member  of  the  Mexican  Con- 
gress, said: 

"  Mexico  is  at  present  very  prosperous,  no  difference  of  opinion 
on  this  subject.  Farm  wages  nearly  the  same  as  they  have  always 
been,  highest  on  coffee  and  tobacco  plantations.  Higher  also  in 
manufacturing  centers.  There  is  a  demand  for  all  available  labor, 
demand  increasing  yearly.  Problem  source  of  supply.  Silver 
purchases  as  much  today  as  it  ever  did,  excepting  of  course 
imported  articles.  Home  manufactures  increasing  so  much  that 
the  working  classes  need  not  buy  imported  articles.  In  the  way  of 
food  or  clothing,  good  cheap  substitutes  are  provided  in  this 
country.  Manufacturing  industries  of  all  kinds  prosperous.  But 
few  existed  fifteen  or  twenty  years  ago.     Agriculture  is  prosperous 


MEXICO  AND  SILVER  MONEY  203 

and  is  far  more  varied  at  present  than  it  was  fifteen  or  twenty  years 
ago.  Many  agricultural  products  are  exported,  such  as  coffee, 
tobacco,  grain,  etc.,  which  twenty  years  ago  were  hardly  sufficient 
for  home  consumption.  Failures  are  seldom  heard  of.  Sharp 
competition  as  exists  elsewhere  is  not  as  yet  an  element  likely  to 
bring  about  failures.  Speculation  as  understood  in  the  United 
States  is  unknown  here.  Exports  show  a  marked  increase  yearly. 
Mexico  would  be  ruined  if  it  were  to  go  to  a  gold  standard." 

Sec.  348.  In  an  interview  with  J.  M.  Fowler  had  in 
Los  Angeles,  California,  in  January,  1899,  Mr.  Fowler 
said: 

"  I  was  in  Mexico  for  the  purpose  of  locating  a  tract  of  land  for 
American  investors.  I  was  in  the  republic  about  eight  months  and 
went  over  most  of  the  tropical  portion  of  Mexico— the  country  south 
of  the  City  of  Mexico. 

"  The  people  are  generally  prosperous.  I  do  not  believe  there  is  a 
man  in  the  Republic  of  Mexico  that  could  not  get  work  at  any  time 
that  he  desired  to  work.  The  range  of  wages  for  farm  labor  is  from 
30  cents  to  $1  per  day.  One  dollar  to  $1.50  is  paid  for  railroad 
building.  The  30-cent  laborers  are  Indians.  In  some  parts  of  the 
republic  Indians  receive  as  high  as  $1  per  day. 

"  Mexico  is  improving  very  rapidly.  In  tne  last  ten  or  fifteen 
years  there  has  been  a  wonderful  development  in  manufacturing 
industries. 

"  I  do  not  think  the  purchasing  power  of  silver  has  declined  in 
Mexico,  at  least  so  far  as  Mexican  products  are  concerned.  Tailors 
in  Mexico  claim  that  they  can  make  as  good  a  suit  of  clothes  today 
for  $25  in  silver  money  as  they  could  make  twenty-five  years  ago 
for  $25  in  gold.  Silver  will  go  as  far  in  the  payment  of  freight  or 
fare  on  railroads  as  it  ever  would.  The  people  are  prosperous,  con- 
tented and  happy.  When  I  say  the  people  are  prosperous  I  do  not 
mean  to  be  understood  as  including  the  Indians.  The  Indian  is  sat- 
isfied when  he  has  enough  to  eat,  as  a  rule  he  has  no  ambition  and 
never  accumulates  much  property;  there  are  some  exceptions  but 
generally  he  will  not  work  if  he  has  a  week's  provisions  in  stock. 

"  Take  the  country  as  a  whole,  Mexico  is  in  a  very  prosperous 
condition.  There  are  more  improvements  of  all  kinds  going  on  in 
Mexico  today  and  property  is  advancing  more  rapidly  in  value  than 
at  any  other  time  in  the  history  of  that  country.    This  rapid  growth 


204  BIMETALLISM 

and  general  prosperity  is  usually  attributed  by  tiie  Mexican  people  to 
their  abundance  of  cheap  silver  money,  and  in  this  I  think  they  are 
right." 

Sec.  349.  In  an  interview  with  Mr.  E.  G.  Ord,  Mr. 
Ord  said: 

"  During  the  year  1898  I  was  Master  Mechanic  in  a  tinware 
manufactory  in  Monterey,  Mexico.  It  is  a  large  establishment 
employing  300  or  400  men.  Wages  paid  unskilled  workmen 
averaged  about  one  dollar  per  day. 

"  Mexico  is  in  a  very  prosperous  condition.  Monterey  is  a  city 
containing  about  60,000  inhabitants  and  is  an  important  manu- 
facturing center.  Twenty  years  ago  it  was  a  small  town  of  4,000 
or  5,000  people.  There  is  no  difference  in  opinion  in  Mexico  on  the 
silver  question.  It  is  universally  believed  by  the  people  that  the 
abundance  of  cheap  money  in  Mexico  has  been  the  principal  cause 
of  the  wonderful  growth  and  development  of  the  country. 

"  Everything  produced  in  Mexico  is  produced  on  a  silver  basis, 
and  when  exported  and  sold  for  gold,  the  premium  received  on  the 
gold  is  sufficient  in  itself  to  stimulate  production  to  its  utmost 
limits. 

"  Silver  in  Mexico  has  not  depreciated.  It  will  buy  as  much  now 
as  it  ever  would.  The  divergence  between  gold  and  silver,  at  least 
so  far  as  Mexico  is  concerned  has  not  been  caused  by  a  depreciation 
in  silver  but  by  the  appreciation  of  gold. 

"  The  wages  paid  for  Mexican  labor  is  much  better  than  it  was 
twenty  or  twenty-five  years  ago,  and  it  stands  to  reason  that  if  the 
laborer  receives  more  money  and  the  money  received  has  the  same 
purchasing  power  dollar  for  dollar  now  that  it  formerly  had  that 
the  laborer's  condition  has  been  improved." 

Sec.  350.  Interview  with  Senor  Lie.  L.  F.  J.  Austin, 
March  16,  1899: 

"  Senor  Austin  said:  M  am  a  resident  of  Mexico.  I  have  resided 
in  the  republic  for  fifteen  years.  I  am  interested  in  as  part  owner, 
in  fact  principal  owner,  of  a  coffee  plantation  in  the  State  of  Oaxaca, 
in  this  republic.  We  employ  a  large  number  of  men  on  the  coffee 
plantation.  We  pay  our  men  50  cents  per  day.  Wages  are  much 
higher  than  they  were  fifteen,  ten,  or  even  five  years  ago,  and  are 
constantly  rising  as  the  demand  for  labor  increases.    Wages  in 


MEXICO  AND  SILVER  MONEY  205 

certain  localities  are  100  per  cent.,  and  even  more  than  100  per  cent, 
higher  than  they  were  ten  or  fifteen  years  ago;  in  other  localities 
they  have  not  advanced  so  much,  but  it  is  a  conservative  estimate 
to  say  that  the  wage  of  the  laborer,  upon  the  average,  the  whole 
republic  taken  together,  has  advanced  at  least  25  per  cent,  within 
the  past  fifteen  years. 

" '  Imported  goods,  at  least  certain  classes  of  imported  goods,  are 
some  higher,  but  not  very  much  higher,  than  they  were  fifteen  years 
ago,  but  Mexican  commodities,  especially  such  as  are  consumed  by 
the  poorer  classes,  are  no  higher,  when  measured  by  silver,  than 
they  were  then.  Of  course  there  has  been  fluctuation  in  the  value 
of  Mexican  commodities  caused  by  short  or  abundant  crops.' 
[After  referring  to  statistics  Mr.  Austin  continued  as  follows]: 
*  For  instance,  beans  per  load  of  300  ft)s.  in  January,  1889,  could  be 
purchased  on  the  market  for  $7.00.  In  September,  1892,  they  were 
worth  $22.00,  and  in  June  and  July*  1895,  only  $7.00.  Corn  in 
January,  1889,  was  worth  $4.60  per  load;  in  September,  1892, 
$10.00;  and  in  July,  1895,  $5.00.  Wheat  in  January,  1889,  was 
worth  $11.00  per  load;  in  April  and  May,  1894,  $13.50;  and  in 
December,  1895,  $11.00.  These  fluctuations  in  price,  however,  had 
no  connection  whatever  with  the  relative  value  of  gold  and  silver, 
but  were  caused  by  short  or  abundant  crops. 

"  '  The  silver  money  received  by  the  laborer  now  will  go  as  far  in 
supporting  himself  and  family  as  the  silver  received  by  him  when 
gold  and  silver  were  of  equal  value  at  the  coinage  ratio.  The 
divergence  between  gold  and  silver,  at  least  so  far  as  Mexico  is 
concerned,  has  been  caused  by  a  rise  in  the  value  of  gold,  not  by  a 
fall  in  the  value  of  silver.  Silver  will  buy  the  same  or  nearly  the 
same  quantity  of  Mexican  product  now  that  it  would  in  1873,  while 
gold  will  buy  twice  as  much  as  it  would  in  1873.  Hence  it 
necessarily  follows  that  it  is  gold  and  not  silver  that  has  changed 
in  purchasing  power.  This  is  certainly  true  so  far,  at  least,  as  this 
country  is  concerned. 

"'Again,  the  so-called  depression  in  the  value  of  silver,  but  which 
in  fact,  is  an  appreciation  of  gold,  operates  as  a  bounty  on  exports. 
Commodities  which  could  not  be  produced  in  this  country  for  export 
when  gold  and  silver  were  of  equal  value  at  their  coinage  ratio,  can 
now  be  exported  at  a  profit.  Everything  here  is  produced  on  a 
silver  basis.  Coffee,  for  instance,  can  be  produced  in  this 
country  and  exported  to  Europe  or  the  United  States  and  sold  at  a 


206  BIMETALLISM 

loss  on  the  cost  of  production  of  10, 15  or  20  per  cent,  and  the  expor- 
ter will  be  reimbursed  by  the  premium  of  100  per  cent,  on  the  gold 
received  in  payment,  leaving  him  a  very  handsome  profit.  The 
Mexican  coffee  planter  wants  nothing  better  than  this.  He  is  satis- 
fied with  the  present  financial  situation. 

"  *  Mexico  at  the  present  time  is  more  prosperous  and  is  being  more 
rapidly  developed  than  at  any  other  time  in  her  history.  Railroads 
are  being  built  all  over  the  republic,  areas  of  land  heretofore  uncul- 
tivated are  being  improved  and  brought  under  cultivation.  There  is 
a  demand  for  all  the  labor  that  can  be  obtained.  Such  a  thing  as  an 
unemployed  willing  worker  in  Mexico  is  unknown.  The  people  are 
prosperous,  contented  and  happy  and  are  perfectly  satisfied  with  the 
present  financial  situation.' " 

Sec.  351.  While  in  Mexico  I  had  an  interview  with 
General  C.  H.  M.  y  Agramonte,  a  prominent  lawyer  of 
the  City  of  Mexico  and  proprietor  of  the  Anglo-American, 
who  said: 

"Mexico  at  the  present -time  is  in  a  very  flourishing  condition. 
The  wage  of  the  wage-worker  is  much  better  than  formerly.  In 
my  opinion  wages  have  advanced  25  or  30  per  cent,  within  the  past 
fifteen  or  twenty  years.  There  is  a  demand  for  all  available  labor. 
No  man  in  Mexico  need  be  unemployed.  The  purchasing  power  of 
silver  money  is  as  great  today  in  Mexico  as  it  ever  was  so  far  as 
Mexican  commodities  are  concerned.  It  will  go  as  far  in  the  hands 
of  the  laborer  in  purchasing  the  necessaries  of  life  as  it  would  when 
gold  and  silver  were  at  par  at  the  coinage  ratio. 

"  Some  classes  of  imported  goods  are  higher  than  they  were,  but 
are  not  very  much  higher.  The  general  fall  in  prices  in  gold 
standard  countries  and  the  saving  we  make  in  import  duties 
by  paying  such  duties  with  money  the  gold  valuation  of 
which  is  but  50  cents  on  the  dollar  has  prevented  the  rise  of 
imported  goods  very  much  above  their  former  level.  Manufacturing 
industries  are  immeasurably  better  off  than  they  were  twenty  years 
ago.  In  fact  almost  all  of  the  manufacturing  industries  of  this 
country  have  been  established  within  the  last  twenty  years.  The 
manufacturing  industries  are  in  a  very  prosperous  condition  and  are 
paying  handsome  dividends.  Everything  produced  in  Mexico  is 
produced  on  a  silver  basis  and  when  exported  is  sold  for  gold,  and 
manufactured  goods  or  agricultural  products  produced  for  export 


MEXICO  AND  SILVER  MONEY  207 

can  be  shipped  to  Europe  or  the  United  States  and  sold  at  a  loss  of 
25  per  cent,  on  the  cost  of  production  and  transportation,  and  the 
exporter  will  be  reimbursed  and  a  handsome  profit  secured  by  the 
premium  of  100  per  cent,  obtained  on  the  gold  he  receives  in 
exchange  for  his  exports. 

**  Thus  encouraged  there  has  been  a  wonderful  development  in 
agriculture.  Hundreds  of  thousands  of  acres  of  land  have  been 
opened  up  to  cultivation  within  the  past  twenty  years,  and  a  large 
export  trade  has  been  built  up.  Business  failures  are  almost 
unknown  in  Mexico.  Exports  are  steadily  and  rapidly  increasing. 
Much  of  Mexico's  prosperity  dates  from  the  time  that  a  serious 
divergence  between  gold  and  silver  manifested  itself,  and  as  this 
divergence  between  the  metals  increased  the  development  of 
Mexico  and  her  general  prosperity  increased.  Mexico  does  not 
need  a  gold  standard.  There  seems  to  be  no  disposition  on  the 
part  of  the  people,  or  of  the  Government,  to  make  any  change  in 
our  monetary  system." 

Sec.  352.  Romero  on  page  594  of  *' Mexico  and  the 
United  States,"  says: 

"  A  change  from  the  silver  to  the  gold  standard  would  cause  in 
Mexico  general  ruin,  as  we  do  not  yet  produce  gold  enough  to 
base  our  currency  on  that  metal,  and  as  our  export  of  commodities 
is  not  yet  sufficiently  large  to  allow  us  to  buy  all  the  gold  we  need 
for  that  purpose." 

Sec.  353.     He  also  says,  see  page  596: 

"The  silver  standard  encourages  very  materially,  so  long  as 
other  leading  commercial  nations  have  the  single  gold  standard,  the 
increase  of  exports  of  domestic  products,  because  the  expenses  of 
producing  them,  land,  wages,  rent,  taxes,  etc.,  are  paid  in  silver, 
and  therefore  their  cost,  as  compared  with  their  market  value,  is 
considerably  less  than  that  of  similar  articles  produced  or  raised  in 
single  gold  standard  countries.  When  sold  in  gold  markets,  there- 
fore, they  bring  very  profitable  prices,  as  they  are  converted  into 
silver  at  a  high  rate  of  exchange.  These  conditions  have  caused  a 
great  development  in  the  exportation  of  some  of  our  agricultural 
products,  because  they  yield  very  large  profits;  coffee,  for  instance 
which  costs  on  an  average  about  ten  cents  a  pound  to  produce  it,  all 
expenses  included,  has  been  sold  at  about  twenty  cents  in  gold  in 


208  BIMETALLISM 

foreign  markets.  The  export  of  other  agricultural  products  which 
did  not  pay  when  gold  and  silver  were  at  par,  that  is  at  the  ratio  of 
16  to  1,  is  now  remunerative,  because  there  is  returned  to  us  in 
exchange  more  than  we  lose  in  the  gold  price  of  the  article.  The 
same  is  the  result  of  some  agricultural  products  that  we  could  not 
export  before  because  their  price  in  foreign  markets  was  not  remu- 
nerative. Such  is  the  case,  for  instance,  with  beans,  which  at  eight 
cents  would  not  pay  when  gold  and  silver  were  at  par,  but  now  that 
eight  cents  in  gold  make  about  sixteen  cents  in  silver,  it  is  a  profit- 
able price." 

Sec.  354.     He  also  says,  see  page  597: 

"  The  silver  standard  is  a  great  stimulus  to  the  development  of 
home  manufactures,  because  foreign  commodities  have  to  be  paid 
for  in  gold,  and,  owing  to  the  high  rate  of  exchange,  their  prices  are 
so  high  that  it  pays  well  to  manufacture  some  of  them  at  home,  our 
low  wages  also  contributing  to  this  result." 

Sec.  355.     He  also  says,  see  page  602: 

"  Our  silver  standard  encourages  the  investment  in  Mexico  of 
capital  from  rich  countries  having  the  gold  standard,  since  every 
gold  dollar  when  sent  to  Mexico  is  converted  into  two  silver  dollars, 
at  the  present  rate  of  exchange,  and,  when  invested  in  lands,  wages 
and  other  expenses  for  the  raising  of  agricultural  products  which  are 
sold  for  gold  in  foreign  markets,  like  coffee,  the  proceeds  are  so 
large  that  they  constitute  a  very  great  inducement  for  the  invest- 
ment of  capital." 

Sec.  356.  I  quote  a  few  paragraphs  from  the  leading 
financial  journals  of  Japan  and  Chile  for  the  purpose  of 
contrasting  the  unhappy  and  distressed  condition  of  Japan 
and  Chile  under  a  gold  standard  with  the  prosperous 
condition  of  Mexico  under  a  silver  standard  and  ask  the 
reader  to  determine  for  himself  which  is  the  better  system. 


JAPAN. 

Sec.  357.  The  effects  produced  in  Japan  by  the 
adoption  of  the  gold  standard  in  that  country  have  not 
been  beneficial.  The  Fiji  Shimpo,  one  of  the  important 
papers  of  the  Empire,  in  reviewing  the  year  1897,  says: 

"  The  adoption  of  the  gold  standard  is  the  worst  mistake  ever 
committed  by  the  Government  in  the  long  history  of  the  thirty 
years  that  have  passed  since  the  present  Meiji  era  began.  The 
Matsukata  ministry,  however,  must  bear  the  full  responsibility  for 
it.  The  prospect  which  the  country  had  of  still  further  developing 
her  industries  owing  to  the  depreciation  of  silver  compared  with 
gold  has  now  been  ruthlessly  thrown  away.  Our  trade  with  silver- 
using  countries  has  already  been  greatly  injured.  In  China,  Corea 
and  the  Strait  Settlement,  where  at  one  time  Japanese  products 
found  a  good  market  and  were  rapidly  expelling  foreign  goods, 
Japan  is  now  losing  ground  and  is  likely  soon  to  have  little  footing 
left.  Many  of  the  factories  in  the  western  part  of  Japan  are 
closing  or  only  running  on  half  time." 

Sec.  358.  The  Greater  Japan,  in  its  review  of  the 
year  1897,  says: 

"We  can  speak  only  in  gloomy  terms  of  the  year  just  past. 
Commercial  affairs  and  political  affairs  reached  their  lowest  depths 
of  depression  and  mismanagement.  The  introduction  of  the  gold 
standard  proved  a  complete  failure.  It  was  to  have  opened  the  door 
to  an  inflow  of  foreign  capital,  thus  succoring  the  distress  of  the 
industrial  classes  and  producing  an  appreciation  in  the  price  of 
public  securities.  But  foreign  capital  has  not  come  in,  neither  have 
public  securities  appreciated.  On  the  contrary,  we  have  seen  an 
ever-increasing  preponderance  on  the  side  of  imports,  a  correspond- 
ing outflow  of  specie,  and  a  steady  fall  in  the  price  of  bonds.  Nor 
is  this  all.  The  effect  of  the  demonetization  of  silver  has  been  fatal 
to  the  most  promising  of  all  Japan's  industrial  enterprises— cotton 
spinning.  Its  chief  market  has  been  closed  against  it,  and  the 
prosperity  that  distinguished  it  at  the  close  of  1896  was  replaced  by 
adversity  at  the  end  of  1897." 

14 


CHILE. 


Sec.  359.  I  quote  from  **  Mexico  and  the  United 
States  "  page  587,  the  following  account  of  the  effects  of 
a  gold  standard  on  the  industrial  and  financial  condition 
of  Chile: 

"  According  to  a  well-informed  financial  paper  of  Chile,  '  La 
Tribuna  de  Valparaiso,'  the  adoption  of  the  gold  standard  in 
that  country,  some  two  years  ago,  has  not  given  satisfactory 
results.  In  point  of  fact,  it  is  asserted  that  since  the  former 
financial  policy  was  discarded  and  gold  has  become  the  only  circu- 
lating medium,  poverty  and  a  paralyzation  of  business  seems  to 
have  fallen  to  the  lot  of  many  districts  that  heretofore  were  very 
flourishing.  There  is  a  noticeable  scarcity  of  circulating  medium  all 
over  the  country,  public  and  private  securities  have  depreciated,  and 
the  rate  of  interest  which  some  years  ago  was  7  or  8  per  cent,  is 
now  as  high  as  12  per  cent.  Furthermore,  since  the  gold  standard 
was  introduced,  five  banks,  with  an  aggregated  capital  of  $3,300,- 
000,  have  failed,  and  three,  with  a  capital  amounting  to  $12,300,000, 
have  gone  into  liquidation.  Thus  it  is  said  that  25  per  cent,  of  the 
money  invested  in  banking  in  that  country  has  been  lost,  and  a 
similar  result  has  obtained  with  regard  to  many  mining  and  indus- 
trial enterprises  which  heretofore  had  been  in  a  most  flourishing 
condition." 

Sec.  360.  Only  a  few  years  since  conditions  in 
Japan  and  Chile  were  almost  as  encouraging  as  those  in 
Mexico  today  (see  sec.  315)  but  those  countries,  influ- 
enced by  the  blandishments  of  gold  standard  advocates, 
forsook  the  silver  standard  under  which  their  development 
and  prosperity  was  attained  and  undertook  to  copy  after 
the  English  gold  standard.  The  result  of  their  experiment 
is  shown  in  the  foregoing  paragraphs  from  their  leading 
financial  papers. 


MEXICO  AND  SILVER  MONEY  211 

Sec.  361.  In  contrast  with  the  deplorable  conditions 
now  existing  in  Japan  and  Chile  resulting  from  attempt- 
ing to  establish  a  gold  standard  in  those  countries  we  find 
a  wave  of  prosperity  sweeping  over  Mexico,  (who  still 
remains  loyal  to  silver),  from  center  to  circumference. 
Not  only  is  her  prosperity  co-extensive  with  the  republic, 
but  her  credit  in  foreign  countries  and  with  foreign  inves- 
tors was  never  better,  in  fact  never  before  so  good,  as  at 
present. 

SEC.  362.  Upon  July  12,  1899,  the  United  States  of 
Mexico  offered  for  sale  by  subscription,  through  the  bank- 
ing houses  of  J.  P.  Morgan  &  Co.,  New  York;  J.  S.  Mor- 
gan &  Co.  of  London,  England,  and  the  Deutsche  Bank 
of  Berlin,  $110,095,000  of  bonds,  to  be  known  as  the  Five 
Per  Cent.  Consolidated  Loan  of  1899,  issued  for  the  pur- 
pose of  taking  up  all  previous  loans  and  to  represent  the 
entire  external  indebtedness  of  the  Government;  thd 
principal  and  interest  to  be  payable  in  gold,  and  free  of 
all  Mexican  taxes,  present  or  future;  the  bonds  to  be  in 
coupon  form,  of  the  following  denominations  —  $97.00, 
$485.00,  $970.00,$2,425.00,  and  $4,850.00,  United  States 
gold  coin,  present  weight  and  fineness,  interest  payable 
quarterly,  upon  the  first  day  of  January,  April,  July  and 
October,  the  entire  issue  to  be  retired  within  forty-five 
years.  The  issue  was  over-subscribed  the  first  day 
upon  which  the  books  were  opened. 

Sec.  363.  An  Associated  Press  dispatch  dated  City 
of  Mexico,  December  2,  1899,  published  in  the  Los 
Angeles  Herald  December  3,  1899,  shows  that  the 
remarkable  prosperity  of  Mexico  is  still  on  the  upward 
grade.  I  reproduce  this  dispatch,  which  is  in  the  follow- 
ing words : 

City  of  Mexico,  Dec.  2. — A  remarkable  and  most  gratifying 
statement  has  been  sent  to  congress  by  Finance  Minister  Limantour 


212  BIMETALLISM 

and  will  be  received  with  interest  by  all  bondholders,  for  it 
shows  the  marvelous  improved  condition  of  the  Mexican  treasury, 
which  is  now  able,  so  ample  are  the  revenues,  to  propose  to 
congress  a  reduction  of  the  federal  taxes.  The  cash  revenue  for 
the  fiscal  year  ended  June  last  was  $60,022,349,  wholly  derived 
from  the  usual  and  normal  sources,  and  much  in  excess  of  the 
finance  minister's  estimate,  most  conservatively  made,  while  the 
returns  for  five  months  of  the  present  fiscaj  year  show  an  increase 
over  last  year.  In  view  of  this  prosperous  condition  of  Mexico's 
revenues.  Minister  Limantour  sends  several  bills  to  congress  of 
great  importance.  Some  $4,000,000  are  appropriated  for  public 
works  of  prime  necessity,  including  new  school  houses  in  the  federal 
district,  new  postoffice  buildings  here  and  at  Vera  Cruz  and  other 
edifices.  The  Government  further  proposes  to  purchase  some  out- 
standing silver  bonds,  bearing  6  per  cent  interest  and  will  also 
abolish  export  taxes  on  coffee,  which  will  be  a  boon  to  the  coffee 
growers.  It  will,  in  addition,  reduce  several  internal  revenue  taxes, 
notably  those  on  bank  checks,  life  insurance  policies  and  the  tax 
imposed  on  new  companies  according  to  the  amount  of  their  capital, 
and  other  reforms  welcomed  by  the  public. 

The  Government  has  now  a  cash  surplus  of  many  millions  of 
dollars,  and  is  amply  able  to  carry  out  its  reforms,  as  revenues  from 
all  sources  show  a  natural  and  gratifying  increase. 

Sec.  364.  The  industrial  situation  in  Mexico  to-day 
is  similar  to  that  prevailing  in  the  United  States  immedi- 
ately after  the  close  of  the  Civil  War,  say  from  1865  to 
1873.  Everybody  has  money.  Property  is  advancing  in 
value.  Business  enterprises  of  all  kinds  are  prosperous. 
Failures  are  almost  unknown.  New  industries  are  being 
established  and  old  ones  developed  and  enlarged.  Mr. 
Morton  of  the  Mexican  National  Railroad  did  not  over- 
estimate the  condition  of  things  in  Mexico  when  he  said: 
**  Mexico  is  today  the  most  prosperous  country  in  the 
world  all  things  considered.  It  is  being  more  rapidly 
developed,  more  railroads  are  being  built,  more  manu- 
factories established,  more  improvements  of  all  kinds  are 
being  made,  proportionately,  especialy  when   we  take 


MEXICO  AND  SILVER  MONEY  213 

into  consideration  the  previous  condition  of  its  people, 
than  in  any  other  country  in  the  world." 

Sec.  365.  The  principal  cause  of  this  wonderful 
development  in  our  sister  republic  is  the  abundance  of 
cheap  silver  money,  just  as  an  abundance  of  cheap 
money  in  the  United  States  from  1865  to  1873  promoted 
an  industrial  boom  in  this  country.  During  that  period 
there  was  more  general  prosperity  among  the  people  in 
the  United  States,  a  more  rapid  accumulation  of  wealth, 
and  a  more  equitable  distribution  of  the  wealth  created, 
than  at  any  other  time  in  the  history  of  this  country,  and 
Mexico  under  similar  conditions  is  enjoying  a  similar 
wave  of  prosperity. 


APPENDIX. 


"  BIMETALLISM  "  -  BY  A.  J.  UTLEY,  IN  "  THE  ARENA."  JUNE  6. 1896. 

Sec.  366.  In  the  discussion  of  the  money  question 
that  is  now  agitating  the  people  throughout  the  length 
and  breadth  of  the  land,  the  advocates  of  gold  mono- 
metallism insist  that  we  should  have  money  that  has 
''  intrinsic  value;^^  that  the  material  on  which  the  money 
stamp  is  placed  should  possess  an  intrinsic  value  equal  to 
the  money  value  stamped  upon  it;  that  gold  possesses 
this  property  and  that  silver  does  not,  and  for  this  reason 
they  favor  a  single  gold  standard. 

Sec.  367.  Are  the  premises  true?  Has  gold  intrinsic 
value.?  If  the  premises  are  not  true,  if  gold  has  no 
intrinsic  value,  then  some  other  reason  must  be  assigned 
for  monometallism. 

The  word  intrinsic  means  internal,  inherent,  not 
apparent  or  accidental,  opposed  to  extrinsic. 

Now  the  fact  is,  gold  has  no  intrinsic  value  whatever. 
All  commodities  have  certain  inherent  or  intrinsic  proper- 
ties which  tend  to  make  the  particular  commodity  more 
or  less  desirable,  and  to  the  extent  that  such  properties 
influence  the  desire  for  their  possession,  such  inherent 
properties  may  enhance  their  value  or  ratio  of  exchange, 
but  value  itself  is  independent  of  and  extrinsic  from  all 
commodities. 

Sec.  368.  If  value  were  intrinsic,  if  it  were  inherent 
in  a  thing,  it  could  not  change  or  fluctuate.  If  the  value 
of  gold  or  silver  were  inherent  in  the  metal,  the  same 
quantity  of  metal  of  the  same  degree  of  fineness  would 
always  be  of  the  same  value.  In  1873,  371^  grains  of 
pure  silver  were  worth  as  much  in  all  the  markets  ©f  the 
world  as  23.2  grains  of  pure  gold.      Now  they  are  worth 


APPENDIX  215 

only  about  one-half  as  much.  Is  it  possible  that  the 
intrinsic  value  of  one  or  both  of  these  metals  has  changed 
since  1873?  Certainly  not.  The  intrinsic  properties  of 
gold  and  silver  are  the  same  now  as  they  were  in  1873,  as 
they  always  have  been;  but  their  relative  values,  when 
uncontrolled  by  legislation,  are  subject  to  great  fluctua- 
tions. 

Sec.  369.  Value  is  a  relative  term  and  is  necessarily 
extrinsic.  Value  is  created  and  controlled  by  the  law  of 
supply  and  demand.  The  inherent  or  intrinsic  properties 
of  a  thing  may  be  of  such  a  character  as  to  limit  the 
supply  and  by  limiting  the  supply  may  enhance  the 
value;  or  extrinsic  circumstances  may  increase  the 
demand  and  by  so  doing  enhance  the  value;  but  value 
always  and  under  all  circumstances  is  determined  by  the 
law  of  supply  and  demand. 

Sec.  370.  But  what  say  the  authorities  on  this  ques- 
tion.?    Condillac,  a  celebrated  French  economist,  says: 

"  The  value  of  a  thing  is  founded  on  the  want  of  it,  or  the  demand 
for  it.  Therefore,  if  the  want  is  more  strongly  felt,  it  gives  the  thing 
a  greater  value;  if  the  want  is  less  felt,  it  gives  it  a  less  value.  The 
value  of  a  thing  increases  with  its  scarcity  and  decreases  with  Its 
abundance.  It  may  even  on  account  of  abundance  decrease  to 
nothing.  A  superfluity,  for  example,  will  have  no  value,  if  we  can 
make  no  use  of  it." 

Sec.  371.  Professor  Gide,  another  French  economist, 
says: 

"  Value,  then,  which  is  the  dominating  idea  of  all  political  econ- 
omy, denotes  nothing  more  than  a  fact  which,  in  itself,  is  very 
simple,  the  fact  that  a  thing  is  more  or  less  desired.  Were  the  word 
French,  we  should  only  have  to  say  that  value  is  desirability.  Since 
value  arises  from  desire  it  proceeds  from  us  rather  than  from  things; 
as  we  say  nowadays,  it  is  subjective  far  more  than  objective.  It  is 
not  attached  to  objects  which  can  be  perceived;  it  is  born  at  the 
moment  when  desire  awakes,  and  vanishes  when  it  dies  out.  Like 
a  butterfly,  desire  flutters  from  thing  to  thing,  and  value  abides  only 
where  desire  rests." 

Sec.  372.     Aristotle  defined  value  as  follows: 

"  Value  is  not  a  quality  of  an  object,  but  an  affection  of  the  mind. 
The  sole  origin,  source,  or  cause  of  value  is  human  desire.  When 
there  is  a  demand  for  things  they  have  value;  when  the  demand 
increases  (the  supply  remaining  the  same)  the  value  increases; 
when  the  demand  decreases  the  value  decreases.  When  the  demand 
altogether  ceases,  the  value  is  altogether  gone." 


216  BIMETALLISM 

Sec.  373.  Professor  Perry,  in  his  work  on  Political 
Economy,  says: 

"  A  sudden  change  in  the  fashion  will  frequently  take  away  at  a 
stroke  one-half  the  value  of  goods  that  were  fashionable  but  are  so 
no  longer.  The  matter  is  all  there  and  the  form  of  the  matter  is  all 
there,  but  the  value  is  one-half  escaped.  It  is  clear  that  there  is  no 
inherent  quality  called  value  in  anything.  Value  is  the  relation  of 
mutual  purchase  established  between  two  services  by  their  exchange. 
Value  starts  in  desire,  gives  birth  to  efforts,  proceeds  by  estimates, 
and  ends  in  satisfactions." 

Sec.  374.  Senator  Jones,  in  his  great  speech  delivered 
in  the  United  States  Senate  in  October,  1893,  said: 

"  Qualities  may  be  said  to  be  inherent  in  objects,  but  value  being 
a  conception  of  the  mind  cannot  be  intrinsic  or  inherent.  If  value 
were  intrinsic,  if  it  resided  in  an  article,  it  could  not  be  taken 
from  it,  and  it  could  not  be  changed  by  changes  in  the  number  of 
objects  of  which  value  is  asserted,  or  with  modifications  in  the 
desires  of  men  to  become  possessed  of  such  articles.  Qualities  that 
are  inherent  do  not  vary  with  the  shifting  degrees  of  estimation  in 
which  they  are  held  by  mankind.  Hardness  in  a  stone,  gravity  in 
lead,  do  not  suffer  either  augmentation  or  diminution  by  reason  of 
any  increase  or  reduction  of  the  appreciation  of  men.  If  value  were 
intrinsic  in  articles  it  would  remain  intrinsic  whether  people  wanted 
them  or  not.  But  things  can  have  no  economic  properties  by  and 
of  themselves;  those  properties  exist  only  because  there  are  people. 
A  thing  can  have  no  use  unless  some  one  wants  to  use  it;  it  can 
have  no  value  unless,  in  addition  to  being  wanted,  some  one  is  will- 
ing to  incur  sacrifice  to  obtain  it." 

Sec.  375.  Professor  Macleod,  an  eminent  English 
economist,  says: 

"  Value,  like  distance  or  equation,  requires  two  objects.  V^e 
cannot  speak  of  absolute  or  intrinsic  distance  or  equality.  Single 
objects  cannot  be  distant  or  equal.  If  we  are  told  that  an  object  is 
distant,  or  equal,  we  immediately  ask — distant  from  what?  or 
equal  to  what?  So  it  is  equally  clear  that  a  single  object  cannot 
have  value.  We  must  always  ask — value  in  what?  And  it  is 
clear  that  as  it  is  absurd  to  speak  of  a  single  object  having  absolute 
or  intrinsic  distance,  or  having  absolute  or  intrinsic  equality,  so  it  is 
equally  absurd  to  speak  of  an  object  having  absolute  or  intrinsic 
value." 

Sec.  376.  Barbon,  an  able  writer  on  economics,  who 
lived  about  two  hundred  years  ago,  said: 

"  Value  is  only  the  price  of  things;  that  can  never  be  certain, 
because  to  be  certain  it  must  at  all  times  and  in  all  places  be  of  the 
same  value;   therefore  nothing   can   have   intrinsic  value.     But 


APPENDIX  217 

things  have  an  intrinsic  virtue  in  themselves,  which  in  all  places 
have  the  same  virtue:  as  the  lodestone  to  attract  iron,  and  the 
several  qualities  which  belong  to  herbs  and  drugs.  But  these 
things  though  they  may  have  great  virtue  may  be  of  small  value  or 
no  price  according  to  the  place  where  they  are  plenty  or  scarce. 
Things  have  no  value  in  themselves:  it  is  opinion  and  fashion 
brings  them  into  use  and  gives  them  values." 

Sec.  377.  The  International  Cyclopedia,  published 
in  Boston  in  1894,  defines  value  as  follows: 

"  Value,  in  political  economy,  is  one  of  those  terms  that  demand 
attention  more  for  the  clearing  away  of  its  application  to  vague  and 
fallacious  uses  than  for  an  attempt  to  give  it  a  strict  scientific 
definition.  It  has  a  distinct  meaning  only  when  it  is  used  as 
'  value  in  exchange '  and  between  things  coexisting  in  time  and 
place.  Two  articles  each  of  which  will  bring  $25  in  Boston  are 
equivalent  in  value  there.  Cost  has  nothing  to  do  with  value. 
If  a  bale  of  silk  costs  $500,  and  if  from  disease  of  the  silk-worm  the 
price  of  the  commodity  rises  so  that  it  will  bring  $750,  that  is  its 
value;  so  also  if  there  be  a  fall  in  price  so  that  it  will  only  bring 
$375,  that  is  its  value." 

Sec.  378.  Professor  Jevons,  in  his  work  on  Political 
Economy,  says: 

"A  student  of  economics  has  no  hope  of  ever  being  clear  and 
correct  in  his  ideas  of  the  science  if  he  thinks  of  value  as  at  all  a 
thing  or  an  object  or  even  as  anything  which  lies  in  a  thing  or 
object.  Persons  are  thus  led  to  speak  of  such  a  nonentity  as 
intrinsic  value.  There  are  doubtless  qualities  inherent  in  such  a 
substance  as  gold  or  iron  which  influence  its  value;  but  the  word 
value,  so  far  as  it  can  be  correctly  used,  merely  expresses  the 
circumstance  of  its  exchanging  in  a  certain  ratio  for  some  other 
substance. 

"  Value  in  exchange  expresses  nothing  but  a  ratio,  and  the  term 
should  not  be  used  in  any  other  sense.  To  speak  simply  of  the 
value  of  an  ounce  of  gold  is  as  absurd  as  to  speak  of  the  ratio  of  the 
number  seventeen.  W^hat  is  the  ratio  of  the  number  seventeen  ? 
The  question  admits  of  no  answer,  for  there  must  be  another 
number  named  in  order  to  make  a  ratio;  and  the  ratio  will  differ 
according  to  the  number  suggested." 

Sec.  379.  In  a  work  entitled  "Money  and  Mechan- 
ism of  Exchange,"  Professor  Jevons  says: 

"  It  has  been  usual  to  call  the  value  of  the  metal  contained  in 
coin  the  intrinsic  value  in  the  coin;  but  this  use  of  the  word 
intrinsic  is  likely  to  give  rise  to  fallacious  notions  concerning  value, 
which  is  never  an  intrinsic  property  or  existence,  but  merely  a 
circumstance  or  external  relation." 


218  BIMETALLISM 

Sec.  380.  There  are  certain  properties  in  gold  that 
make  it  desirable  for  certain  uses  independent  of  legisla- 
tion, but  gold  derives  its  chief  value  from  the  fact  that 
by  virtue  of  law  a  certain  quantity  of  it  may  be  coined 
into  a  dollar  and  when  so  coined  the  dollar  is  a  legal 
tender  and  lawful  money.  If  the  demand  for  it  as  a 
money  metal  is  increased  (as  it  would  be  by  the  demone- 
tization of  silver),  its  value  will  be  increased;  while,  on 
the  other  hand,  if  gold  should  be  demonetized  its  value 
would  almost  entirely  disappear.  The  stock  of  gold  now 
in  use  as  money  amounts  to  something  more  than 
^3,500,000,000.  There  is  enough  in  stock  to  supply  the 
demand  for  use  in  the  arts  for  seventy  years.  The 
artisan  will  not  pay  much  for  material  that  must  be  kept 
in  stock  seventy  years  before  consumption.  It  is  safe  to 
say  that  if  gold  should  be  demonetized,  if  the  fictitious 
value  given  it  by  law  should  be  taken  from  it,  23.2  grains 
of  gold  would  not  bring  ten  cents  in  the  markets  of  the 
world;  that  90  per  cent  of  the  present  value  of  gold  is 
fictitious  and  caused  solely  by  legislation. 

Sec.  381.  I  have  devoted  considerable  space  to  the 
discussion  of  the  phrase  '^intrinsic  value,"  because  it 
has  been  so  long  and  persistently  asserted  by  the  money 
kings,  and  especially  by  the  gold  monometallists,  that 
gold  has  **  intrinsic  value,"  that  it  is  a  **  standard  of 
value"  and  a  "measure  of  value,"  that  many  people 
who  have  made  no  special  study  of  economics  have  been 
and  are  deceived,  and  because  no  man  can  understand 
the  true  character  and  function  of  money  until  he  realizes 
the  fact  that  there  is  no  intrinsic  value  in  anything.  On 
account  of  the  importance  of  a  correct  understanding  of 
the  meaning  of  the  word  value  I  was  not  content  with  a 
simple  statement  of  the  fact  that  value  is  a  relative  term, 
and  could  not  be  intrinsic  or  inherent  in  anything;  but  I 
have  introduced  authorities  that  prove  beyond  the  possi- 
bility of  a  doubt  that  there  is  no  intrinsic  value  in  the 
so-called  precious  metals,  and  that,  consequently,  the 
plea  for  gold  money  on  account  of  its  supposed  intrinsic 
value  is  fallacious. 

SEC.  382.     It  is  claimed  by  the  gold  standard  men  that 


APPENDIX  219 

if  we  restore  to  silver  its  ancient  right  of  free  and 
unlimited  coinage  the  United  States  would  become  the 
dumping-ground  of  all  the  cheap  silver  in  the  world. 

If  the  United  States  should  restore  to  silver  its  ancient 
right  of  free  and  unlimited  coinage  there  would  be  no 
ckeap  silver  in  the  world.  The  reason  why  silver  is 
worth  less  (measured  by  gold)  now  than  it  was  in  1873 
is  because  and  only  because  of  adverse  legislation;  and 
when  the  laws  that  discriminate  against  silver  are 
repealed,  silver  will  resume  its  ancient  place  at  the  ratio 
existing  prior  to  such  adverse  legislation. 

Sec.  383.  Men  tell  us  that  you  cannot  legislate  value 
into  a  thing  nor  out  of  a  thing,  but  that  value  is  controlled 
by  the  inexorable  law  of  supply  and  demand.  Now, 
while  it  is  true  that  value  is  controlled  by  the  law  of 
supply  and  demand,  it  is  also  true  that  anything  which 
tends  to  increase  the  demand  for  a  thing  (the  supply 
remaining  the  same)  must  necessarily  enhance  its  value; 
and  if  the  legislative  demand  is  for  the  total  supply, 
and  if  the  legislative  demand  fixes  a  price  at  which  the 
total  supply  will  be  received,  it  necessarily  follows  that 
the  value  of  the  commodity  so  fixed  cannot  fall  below  the 
price  fixed.  It  might  rise  temporarily  slightly  above  the 
legislative  limit,  but  it  could  not  by  any  possibility  fall 
below  it. 

In  order,  however,  to  have  this  effect,  the  legislative 
demand  must  be  for  the  total  available  supply.  The 
reason  why  the  Bland  Bill  or  the  Sherman  Act  did  not 
restore  silver  to  its  ancient  place  as  a  money  metal,  at 
the  ratio  previously  existing  between  gold  and  silver,  was 
because  the  demand  was  not  for  the  total  available 
supply;  and  an  act  to  coin  the  American  product,  if  such 
an  act  should  be  passed,  would  fail  for  the  same  reason. 

Sec.  384.  That  legislation  does  influence  values  is 
not  only  self-evident,  it  is  historic.  When  the  Bland  Bill 
was  passed  in  1878  (which  provided  for  the  coinage  of 
not  less  than  ^2,000,000  worth  of  silver  per  month)  it 
created  a  demand  for  silver  bullion  that  did  not  exist  prior 
to  its  passage,  and  by  reason  of  this  increased  demand, 
caused  solely  by  legislation,  silver  rapidly  advanced  in 


220  BIMETALLISM 

value  in  all  the  markets  of  the  world.  Again,  in  1890, 
on  the  adoption  of  the  Sherman  Act,  under  the  provisions 
of  which  the  United  States  became  the  purchaser  of  four 
million  five  hundred  thousand  ounces  of  silver  per  month 
silver  bullion  rose  in  value  in  a  few  days  from  94  cents 
per  ounce  to  ^1.20  per  ounce,  not  only  in  the  United 
States,  but  also  in  Europe.  And  when  legislation  was 
adverse  to  silver  in  India  in  1893,  silver  fell  almost  as 
much  in  value  in  twenty-four  hours.  In  view  of  all 
these  facts  can  there  be  any  doubt  that  legislation  did,  in 
the  instances  named,  affect  the  value  of  silver  bullion? 

If  silver  had  free  and  unlimited  coinage  at  the  ratio  of 
16  to  1  in  the  United  States,  silver  bullion  in  this  country 
would  be  worth  $1.29  per  ounce.  No  one  disputes  this 
proposition;  it  is  self-evident.  What  would  it  be  worth 
in  London,  Paris,  or  Berlin?  If  the  coinage  were  free 
and  unlimited  in  the  United  States  and  there  were  no 
demand  in  Europe  or  Asia  for  this  European  bullion,  it 
would  be  worth  the  mint  price  in  the  United  States,  less 
the  cost  of  transportation  to  the  United  States;  there  can 
be  no  question  about  it. 

Sec.  385.  Professor  Jevons,  in  his  **  Theory  of  Politi- 
cal Economy,"  published  in  1879,  page  137,  says: 

"  The  ratio  of  equivalent  weights  of  silver  and  gold,  which  had 
never  before  risen  much  above  16  to  1,  commenced  to  rise  in  1874, 
and  was  at  one  time  (July,  1876)  as  high  as  22.5  to  1  in  the  London 
markets.  Though  it  has  since  fallen,  the  ratio  continues  to  be 
subject  to  frequent  considerable  oscillations.  The  great  production 
of  silver  in  Nevada  may  contribute  somewhat  to  this  extraordinary 
result,  but  the  principal  cause  must  be  the  suspension  of  the  French 
law  of  the  double  standard  and  the  demonetization  of  silver  in 
Germany,  Scandinavia,  and  elsewhere." 

Professor  Jevons  says  the  principal  cause  of  the  diver- 
gence in  the  ratio  between  gold  and  silver  was  the 
**  suspension  of  the  French  law  of  the  double  standard 
and  the  demonetization  of  silver  in  Germany,  Scandinavia 
and  elsewhere." 

I  propose  to  show  that  the  only  cause  of  the  divergence 
between  the  metals  was  the  adverse  silver  legislation  in  the 
United  States  and  elsewhere,  and  that  the  great  produc- 
tion of  silver  in  Nevada  had  nothing  to  do  with  it. 


APPENDIX  221 

Sec.  386.  Professor  Laughlin,  in  his  work  on  Politi- 
cal Economy,  publishes  a  chart  by  which  he  shows  that 
the  value  of  the  world's  production  of  gold  from  1493  to 
1850  was  ^3,314,550,000,  and  the  value  of  the  silver 
produced  during  the  same  time  was  $7,358,450,000,  or 
more  than  twice  as  much  in  value  of  silver  as  of  gold. 
From  the  same  chart  it  appears  that  the  value  of  gold 
produced  from  1850  to  1885  was  $4,425,525,000,  and  that 
the  value  of  the  silver  produced  during  the  same  time 
was  $2,397,475,000,  only  a  little  more  than  one-half  as 
much  in  value  of  silver  as  of  gold.  During  the  first 
period  named  the  ratio  between  gold  and  silver  was  much 
lower  than  during  the  second  period.  If  the  amount  of 
the  production  had  a  controlling  influence  or  any  influence 
over  the  value  of  the  bullion,  the  reverse  of  this  would 
have  been  true. 

Sec.  387.  If  the  legislative  demand  is  for  the  total 
available  supply  of  both  gold  and  silver  at  a  certain  ratio, 
it  necessarily  follows  that,  while  the  value  of  the  metals 
may  fluctuate  as  compared  with  commodities,  the  ratio 
between  the  metals  will  remain  unchanged.  Of  course 
there  will  be  slight  fluctuations  arising  from  local  causes. 
While  neither  of  the  metals  can  fall  below  the  coinage 
value,  either  of  them  may  temporarily  rise  above  it  on 
account  of  some  local  demand.  If  silver  should  rise  in 
value  the  ratio  would  fall.  If  gold  should  rise  in  value 
the  ratio  would  rise.  But  as  soon  as  the  local  demand  was 
satisfied  the  former  ratio  would  be  restored.  If  the  rise  or 
fall  in  either  of  the  metals  was  general,  caused  by  an 
abundant  yield  of  the  mines  or  from  any  other  reason,  so 
long  as  free  and  unlimited  coinage  was  guaranteed  to  both 
metals  the  metal  changing  in  value  would  carry  the  other 
with  it. 

In  proof  of  the  above  proposition,  I  need  only  cite  the 
facts  shown  by  Professor  Jevons,  that  the  value  of  gold 
fell  46  per  cent,  between  1798  and  1809,  and  that  from 
1808  to  1849  it  appreciated  145  per  cent. 

In  1798  the  commercial  ratio  between  gold  and  silver 
was  15.59  to  1,  in  1809  it  was  15.96  to  1,  and  in  the 
meantime  gold  had  fallen  in  value  46  per  cent.     If  gold 


222  BIMETALLISM 

had  not  carried  silver  down  with  it,  the  ratio  between  gold 
and  silver  in  1809  would  have  been  8.42  to  1.  The  ratio 
between  gold  and  silver  in  1809  was,  as  we  have  seen, 
15.96  to  1,  in  1849  it  was  15.78  to  1,  only  a  trifling  fluct- 
uation, but  in  the  meantime  gold  had  appreciated  in  value 
145  per  cent.  In  1809  15.96  pounds  of  silver  were  equal 
in  value  to  one  pound  of  gold,  in  1849  gold  had  appreciated 
145  per  cent.,  and  if  it  had  not  carried  silver  up  with  it,  it 
would  have  taken,  in  1849,  39.68  pounds  of  silver  to  buy- 
one  pound  of  gold.  But,  as  a  matter  of  fact,  the  ratio 
between  gold  and  silver  in  1849  was  15.78,  a  trifle  lower 
than  before  the  appreciation  of  gold.  Is  it  not  conclusively 
established  from  the  above  facts  that  a  general  rise  or  fall 
in  the  value  of  either  of  the  metals  will  carry  the  other 
with  it  as  long  as  free  and  unlimited  coinage  is  guar- 
anteed to  both?  and  is  it  not  necessarily  true  that  the  mass 
of  both  metals  combined  would  be  less  liable  to  serious  fluctu- 
ation in  value  than  either  standing  alone  would  be? 

Sec.  388.  Is  it  not  also  conclusively  established  from 
the  foregoing  facts  that  legislation  can,  by  creating  a 
demand  for  the  total  available  supply  of  an  article  at  a 
fixed  price,  prevent  the  article  from  falling  below  the 
price  fixed,  and  that  when  the  legislative  demand  is  for 
the  total  available  supply  of  two  metals  such  as  gold  and 
silver,  to  be  used  for  a  common  purpose,  and  a  ratio  is 
established  at  which  the  total  supply  will  be  received,  the 
ratio  so  fixed  between  the  metals  will  remain  substantially 
invariable?  The  metals  may  rise  or  fall  in  value  as  mea- 
sured by  commodities,  but  they  cannot  change  in  value 
as  measured  by  each  other,  except  only  such  slight  varia- 
tions as  may  be  produced  by  excessive  local  demands  for 
either  of  the  metals,  and  such  slight  variations  will  be 
temporary  only. 

Sec.  389.  That  legislation  may  establish  and  main- 
tain any  ratio  between  gold  and  silver,  so  long  as  they 
both  have  free  and  unlimited  coinage,  and  that  the  ratio 
established  by  the  country  producing  the  greatest  amount 
or  able  to  control  the  greatest  amount  of  bullion  of  either 
of  the  metals  will  have  a  controlling  influence,  is  a  fact 
well  authenticated  by  history. 


APPENDIX  223 

The  Encyclopedia  Britannica,  Vol.  22,  page  73,  says: 

"In  Spain,  by  the  edict  of  Medina  (1497),  the  ratio  was  103^. 
When  America  was  first  plundered  the  first  fruits  were  gold,  not 
silver;  whereupon  Spain,  in  1546,  and  before  the  wealth  of  the 
silver  mines  of  Potosi  was  known,  raised  the  value  of  gold  to  13 >^, 
and,  as  Spain  then  monopolized  the  supply  of  the  precious  metals, 
the  rest  of  the  world  was  obliged  to  acquiesce  in  her  valuation. 
During  the  following  century  Portugal  obtained  such  immense 
quantities  of  gold  from  the  East  Indies,  Japan,  and  Brazil,  that  the 
value  of  her  imports  of  this  metal  exceeded  £3,000,000  a  year, 
whilst  those  of  Spain  had  dwindled  to  £500,000  in  gold,  and  had 
only  increased  to  ^2,500,000  in  silver.  Portugal  now  governed  the 
ratio,  and  in  1688  raised  the  value  of  gold  to  16  times  that  of  silver. 
Except  during  a  brief  period  of  forty  years  this  ratio  has  ever  since 
been  maintained  in  Spanish  and  British  America  and  the  United 
States.  A  century  later  the  spoils  of  the  Orient  were  exhausted, 
the  Brazilian  placers  began  to  decline,  and  Portugal  lost  her 
importance.  Spain  thus  again  got  control  of  the  ratio,  and,  as  her 
colonial  produce  was  chiefly  silver,  she  raised  its  value  in  1775  from 
one-sixteenth  to  one-fifteenth  and  a  half  that  of  gold  for  the 
Peninsula,  permitting  it  to  remain  at  one-sixteenth  in  the  colonies. 
France,  whose  previous  ratio  (that  of  1726)  was  14 >^,  adopted  the 
Spanish  ratio  of  15;^  in  1785,  and  has  adhered  to  it  ever  since. 
These  three  historical  ratios,  and  the  bearing  of  each  upon  the 
others,  have  influenced  all  legislation  on  the  subject,  and,  where 
there  was  no  legislation,  have  governed  the  bullion  market  for 
more  than  two  centuries." 

From  the  foregoing  historical  account  of  the  ratio 
between  gold  and  silver  it  appears  that  any  nation  pro- 
ducing the  greatest  amount  of  the  precious  metals  has 
always  been  able  to  control  the  ratio  and  fix  the  relative 
values  of  the  metals. 

Sec.  390.  When  Spain  made  her  gold  discoveries  in 
America  and  obtained  a  considerable  supply  of  this  metal 
and  anticipated  still  larger  gold  discoveries,  she  became 
master  of  the  situation  and  at  one  stroke  of  the  pen  arbi- 
trarily raised  the  value  of  gold  from  10^  to  1  to  13^  to 
1,  and  ^'the  rest  of  the  world  was  obliged  to  acquiesce  in  her 
valuation.^''     Why.?     Because  she  controlled  the  supply. 

A  century  afterward,  the  little  kingdom  of  Portugal,  not 
one-quarter  as  large  as  the  State  of  California,  and  at 
that  time  not  producing  one-tenth  of  the  wealth  now 
produced  in  California,  was  able  to  come  to  the  front  and 
dictate  to  the  world  what  the  ratio  should  be  between 
gold  and  silver,  simply  because  at  that  time  she  was 


224  BIMETALLISM 

producing  more  gold  than  any  other  nation  in  the  world. 
She  exercised  her  prerogative  as  the  greatest  gold  pro- 
ducer, and  arbitrarily  raised  the  value  of  gold  from  13^ 
to  1  to  16  to  1,  and  the  rest  of  the  world  was  obliged  to 
acquiesce  in  her  valuation. 

A  century  later,  the  mines  theretofore  controlled  by  Por- 
tugal having  become  exhausted,  *' Portugal  lost  her  import- 
ance," and  Spain,  then  being  a  heavy  producer  of  silver, 
again  got  control  of  the  ratio  and  raised  the  value  of 
silver,  or  reduced  that  of  gold,  which  amounts  to  the 
same  thing,  from  16  to  1  to  1B}4  to  1,  which  ratio  has 
remained  the  European  ratio  since  that  time  (1775).  It 
also  appears  from  the  historical  account  quoted  from  the 
Britannica  that  the  metal  of  which  there  was  the  greatest 
production  was  always  the  one  that  was  increased  in 
value. 

From  the  above  and  foregoing  is  it  not  conclusively 
shown  that  the  relative  value  of  gold  and  silver,  so  long 
as  they  have  free  and  unlimited  coinage,  is  not  influenced 
in  the  slightest  degree  by  the  amount  of  bullion  that  may 
be  produced  of  either  of  the  metals?  In  the  instances 
given  by  Laughlin  when  the  greatest  production  was 
silver,  silver  was  more  valuable  when  measured  by  gold; 
and  when  the  greatest  production  was  gold,  then  gold 
was  more  valuable  when  measured  by  silver.  And  in 
the  instances  cited  in  the  Britannica  it  was  the  metal  of 
which  there  was  the  greatest  production  that  was 
increased  in  value  in  every  instance.  It  is  the  law  and 
not  the  amount  of  the  production  that  fixes  and  maintains 
the  relative  value  of  the  metals. 

Sec.  391.  What  are  the  facts  to-day  as  to  the  produc- 
tion of  silver,  and  where  is  it  being  produced.? 

The  report  of  the  Director  of  the  Mint  dated  June  24, 
1894,  shows  the  world's  production  of  silver  for  the  year 
1893,  rated  at  the  ratio  of  16  to  1,  amounted  to  ^208,371,- 
000.  Of  this  amount  the  United  States  produced  ^77,- 
575,700,  and  Mexico  produced  $57,375,600.  The  amount 
produced  in  the  United  States  and  Mexico  was  ;^  134,951,- 
300,  and  all  the  balance  of  the  world  produced  $73,419,- 
700.     But  of  this  $73,419,700  the  South  American  and 


APPENDIX  225 

Central  American  States,  all  of  which  are  silver-using 
countries  and  equally  interested  with  the  United  States 
in  maintaining  the  price  of  silver,  produced  $25,044,700, 
and  the  Dominion  of  Canada  produced  $321,400,  which 
makes  a  total  production  in  America  of  $160,317,400,  and 
all  the  balance  of  the  world  produced  only  $48,053,600. 
The  amount  actually  produced  in  Europe  was  $19,155,- 
100.  The  amount  produced  in  Great  Britain,  the  country 
that  now  assumes  the  prerogative  of  fixing  the  value  of 
the  silver  bullion  of  the  world,  was  $327,700.  England's 
production  of  silver  is  less  than  two  mills  on  the  dollar  of 
the  total  production.  Instead  of  being  able  to  dictate  the 
value  of  silver  bullion,  she  ought  not  to  be  consulted  at 
all.  She  should  have  no  voice  in  the  matter.  In  fact 
Europe  combined  could  not,  as  against  the  wishes  of 
America,  exert  much,  if  any,  influence  on  the  value  of 
silver.  The  amount  of  her  production  or  of  her  actual 
consumption  of  silver  is  too  trifling  to  have  any  material 
influence  on  its  market  value.  Europe  requires  a  certain 
amount  of  silver  bullion  annually  to  keep  up  her  supply 
of  token  money,  even  though  she  might  discontinue  its 
use  as  money  of  ultimate  or  final  redemption.  The 
amount  now  being  consumed  by  her  for  coinage  purposes 
averages  about  $32,000,000,  annually,  to  which  if  you 
add  the  amount  consumed  by  her  in  the  arts,  it  will  be 
found  that  instead  of  having  silver  to  sell,  she  annually 
consumes  more  than  double  the  amount  of  silver  that 
she  produces. 

It  may  be  a  fine  thing  for  Europe  to  allow  her  to  fix  the 
price  of  silver  bullion,  but  it  is  contrary  to  all  precedent, 
and  an  outrage  on  the  silver-producing  countries. 
America  produces  more  than  three  times  as  much  silver 
as  all  the  balance  of  the  world,  and  more  than  ten  times 
as  much  as  the  amount  produced  in  Europe. 

Sec.  392.  The  total  amount  of  silver  produced  in  the 
world,  outside  of  America,  is  not  sufficient  to  supply  the 
demands  of  Europe  for  coinage  purposes  and  for  use  in 
the  arts.  It  is  not  sufficient  to  supply  the  demand  of 
India  for  coinage  purposes  alone.  It  would  hardly  be 
sufficient  to  keep  the  silver  gods  of  China   in   decent 

15 


226  BIMETALLISM 

repair,  to  say  nothing  about  the  necessity  of  a  new  one 
now  and  then. 

Sec.  393.  Mexico,  and  in  fact  all  of  the  South 
American  and  Central  American  States,  are  equally 
interested  with  us  in  maintaining  the  price  of  silver 
bullion,  and  will  gladly  co-operate  with  us  in  any  effort 
we  may  make  to  restore  silver  to  its  former  position  and 
value  in  the  monetary  system  of  the  world.  It  would  be 
an  act  of  imbecility  for  America,  producing  as  it  does 
more  than  three-fourths  of  the  silver  produced  in  the 
world,  and  more  than  ten  times  as  much  as  the  European 
production,  to  allow  Europe  to  fix  the  price  of  our  silver 
bullion.  We  have  no  interests  in  common  with  Europe 
on  the  silver  question.  We  are  heavy  producers  of 
silver.  We  have  silver  to  sell.  It  is  to  our  interest  to 
maintain  the  price  of  silver  bullion.  Europe  is  a  heavy 
consumer  of  silver.  She  does  not  produce  enough  to 
supply  her  demands.  She  must  enter  the  market  and 
buy  silver,  not  only  for  coinage  purposes,  but  for  use  in 
the  arts.  It  is  to  her  interest  to  buy  silver  at  as  low  a 
price  as  possible.  We  cannot  combine  with  Europe. 
Let  us  combine  with  those  who  have  interests  in  common 
with  us. 

Sec.  394.  America  commands  the  supply  of  silver 
bullion.  The  annual  consumption  of  silver  for  coinage 
purposes,  notwithstanding  the  suspension  of  the  coinage 
of  silver  by  the  Latin  Union,  averaged  for  the  years 
1891,  1892  and  1893  over  $143,000,000,  and  the  con- 
sumption in  the  arts  for  the  same  years  averaged  over 
$27,000,000  (see  report  of  Director  of  the  Mint  for  1894) 
making  a  total  annual  consumption  of  ;^  170,000,000, 
only  148,000,000  of  which  are  produced  outside  of 
America.  After  consuming  all  the  silver  bullion  pro- 
duced outside  of  America,  the  world  must  buy  from  us 
$122,000,000  worth  of  silver  bullion  annually  for  coinage 
purposes,  and  they  must  pay  the  price  fixed  by  us  if  we 
have  manhood  enough  left  to  fix  a  price.  In  fact,  the 
world  has  been  paying  at  the  rate  of  about  $1.29  per 
ounce  for  silver  bullion  ever  since  1873,  while  we  have 
received  on  an  average  only  about  two-thirds  that  amount 


APPENDIX  227 

and  the  speculators  of  Europe  have  been  pocketing  the 
difference.  Is  it  not  about  time  to  dispense  with  the 
European  middleman  and  sell  direct  to  the  consumer  at 
actual  value? 

Sec.  395.  How  about  the  gold  production  of  the 
world  ? 

The  report  of  the  Director  of  the  Mint  shows  that  the 
world's  production  of  gold  for  the  year  1893  was 
;^155,521,700,  and  that  the  amount  produced  in  the 
various  countries  was  as  follows: 

America $49,050,700 

Europe 28,165,100 

Asia 13,311,500 

Africa 29,305,800 

Australasia 35,688,600 

Total $155,521,700 

It  appears  from  the  above  and  foregoing  that  America 
is  not  only  the  greatest  producer  of  silver  in  the  world, 
but  that  she  is  also  the  greatest  producer  of  gold.  Cer- 
tainly, then,  according  to  precedent,  she  has  the  right  to 
fix  the  ratio  between  the  metals,  and  when  she  exercises 
her  prerogative  and  fixes  the  ratio  tfie  world  will  he 
obliged  to  acquiesce  in  her  valuation. 

The  total  output  of  gold  of  America,  Asia,  and  Russia, 
all  of  which  are  silver-using  countries,  is  $87,168,400, 
and  the  production  of  the  rest  of  the  world  is  but  ^68,- 
353,300,  and  of  this  amount  $29,305,800  is  produced  in 
Africa.  Nearly  all  of  the  African  gold  is  produced  in  the 
South  African  Republic,  a  pure  democracy  in  Southern 
Africa.  Africa  has  but  little  interest  in  monetary  affairs 
and  is  never  consulted  on  monetary  matters.  If  the 
African  product  is  deducted,  or  not  counted  on  either  side, 
we  have  the  world's  annual  produqj:ion,  exclusive  of 
Africa,  $126,215,900,  of  which  America,  Asia  and  Russia 
produce  $87,168,400,  and  the  balance  of  the  world  pro- 
duces $39,047,500. 

Sec.  396.  The  amount  of  gold  produced  in  countries 
now  clamoring  for  a  single  gold  standard  is  not  enough  by 
more  than  $11,000,000  to  supply  the  demand  for  gold  for 
use  in  the  arts,  even  after  counting  in  Australasia,  with 


228  BIMETALLISM 

the  gold  monometallists.  All  the  gold  produced  in  these 
countries  and  $11,000,000  worth  of  that  produced  in 
silver-using  countries  would  be  consumed  in  the  arts 
before  a  single  dollar's  worth  would  be  available  for 
coinage  purposes. 

The  amount  of  gold  produced  in  Europe,  exclusive  of 
Russia — and  Russia  is  not  clamoring  for  gold,  Russia  is  a 
silver  standard  country  today  —  is  only  $3,358,900, 
or  a  trifle  more  than  two  per  cent  of  the  total  output. 
The  greatest  objection  to  silver  comes  from  England. 
England's  bitter  fight  against  silver  dates  from  1816,  and 
from  that  time  until  the  present  she  has  constantly 
opposed  its  use  as  money.  How  much  gold  does  she 
produce?  In  1893  she  produced  the  enormous  sum  of 
$42,300,  less  than  three-tenths  of  one  mill  on  the  dollar 
of  the  world's  production  for  that  year.  To  allow  a 
country  virtually  producing  no  gold  or  silver  to  dictate  to 
the  bullion-producing  countries  what  the  ratio  between 
the  metals  shall  be,  or  to  have  any  influence  whatever  in 
fixing  the  ratio,  or  to  be  even  consulted  in  any  manner, 
is  an  outrage  on  the  intelligence  of  the  rest  of  the  world. 

Sec.  397.  But  it  may  be  claimed  that  Great  Britain 
should  be  credited  with  the  gold  produced  in  her  colonies 
and  dependencies.  If  this  was  done  let  us  see  how  the 
account  would  stand. 

Gold  produced  in  Great  Britain $       42,300 

"  Australasia 35,688,600 

"  Dominion  of  Canada 927,200 

"  British  India 3,813,600 

"  British  Guiana 2,567,400 

$43,039,100 

But  of  the  gold  produced  in  Australasia  $32,059,354 
was  coined  into  money  in  the  Australian  Mint  (see 
report  of  Director  of  the  Mint),  consequently  that  amount 
of  the  Australian  bullion  could  not  have  been  exported  to 
England;  therefore  this  amount  must  be  deducted,  which 
leaves  $10,979,746  as  the  total  supply  that  the  mother 
country  could  by  any  possibility  have  received  from  her 
colonies. 


APPENDIX  229 

Sec.  398.  It  may,  however,  be  claimed  that  England 
should  have  credit  for  at  least  a  part  of  the  African  out- 
put. Undoubtedly  a  portion  of  the  gold  mined  in  Africa 
is  taken  out  by  English  operators,  but  I  have  no  means  of 
ascertaining  what  proportion.  The  gold  mines  of  Africa 
are  common  plunder  for  the  entire  world.  Every 
nationality  has  its  representatives  in  Africa  digging  for 
gold;  and  as  nine-tenths  of  the  world  today  are  using 
silver  as  full  legal  tender  money,  all  of  whom  are  inte- 
rested in  maintaining  the  value  of  silver,  I  take  it  for 
granted  that  the  nine-tenths  can  get  away  with  as  much 
African  gold  bullion  as  the  other  one-tenth,  consequently 
I  leave  the  African  output  entirely  out  of  the  case.  If, 
however,  Great  Britain  controlled  all  of  it  she  would  still 
have  less  than  the  American  output.  If  she  controlled  all 
the  African  gold  she  would  still  have  less  than  the 
demand  for  consumption  in  the  arts,  to  say  nothing  about 
controlling  the  coinage  ratio  of  the  world. 

Sec.  399.  If  in  1546  Spain,  simply  because  she  was 
the  greatest  producer  of  gold,  was  able  to  arbitrarily 
establish  and  maintain  for  one  hundred  years  the  ratio 
between  gold  and  silver,  and  then  Portugal,  because  she 
had  become  the  greatest  producer  of  gold,  was  able  to 
arbitrarily  raise  its  value  as  compared  with  silver  and 
maintain  her  ratio  for  another  hundred  years,  and  if 
Spain,  then  having  become  again  the  greatest  producer 
of  the  precious  metals,  but  now,  silver  being  the  metal  of 
which  there  was  the  greatest  production,  by  her  arbitrary 
edict  was  able  to  raise  the  value  of  silver  as  measured  by 
gold,  and  the  rest  of  the  world  was  obliged  to  acquiesce 
in  these  several  valuations  so  fixed  first  by  Spain,  then 
by  Portugal,  and  afterward  by  Spain  again,  simply  be- 
cause at  the  time  the  several  ratios  were  fixed  these 
nations  were  the  greatest  producers  of  gold  or  silver, 
what  is  to  prevent  the  United  States  with  her  immense 
commerce,  and  annually  producing,  as  she  does,  hun- 
dreds of  millions  of  dollars'  worth  of  the  absolute 
necessaries  of  life  that  Europe  needs  and  must  have  and 
can  procure  nowhere  else,  and  controlling  as  she  does  a 
monopoly  of  both  gold  and  silver,  what  is  to  prevent  her 


230  BIMETALLISM 

from  establishing  and  maintaining  any  ratio  between  the 
metals  that  she  sees  fit  to  establish?  Nothing  but  the 
ignorance,  stupidity,  cowardice,  or  rascality  of  the  mem- 
bers of  our  National  Legislature. 

Sec.  400.  Is  there  any  danger '  of  our  getting  too 
much  silver  money  in  the  United  States?  The  report  of 
the  Director  of  the  Mint  published  in  1893  shows  that 
the  total  amount  of  silver  coin  now  in  existence  is 
^4,042,700,000.  If  we  had  all  of  it,  it  would  make  a  per 
capita  circulation  of  about  ;^58  for  our  present  population, 
and  that  is  not  too  much  money  for  the  business  interests 
of  this  country.  France  has  nearly  that  sum  per  capita, 
and  France  is  now  the  most  prosperous  country  in  the 
world. 

Sec.  401.  In  1865  and  1866  we  had  in  the  United 
States,  including  the  seven-thirty  notes  and  the  various 
other  issues  that  were  by  law  a  legal  tender  and  lawful 
money,  a  greater  per  capita  circulation  than  all  the  silver 
in  the  world  would  give  us  now;  and  it  must  be  conceded 
that  we  then  had  the  most  prosperous  times  this  country 
ever  experienced.  Even  Hugh  McCulloch  admitted  that 
at  that  time  **the  people  were  prosperous  and  compara- 
tively free  from  debt." 

Sec.  402.  But  it  is  insisted  by  the  gold  standard  men 
that  silver  is  too  bulky  and  heavy  to  be  used  as  money, 
that  the  silver  we  now  have  will  not  circulate,  and  that 
the  Government  has  impoverished  itself  already  in  build- 
ing vaults  in  which  to  store  it. 

So  far  as  its  circulation  as  money  is  concerned  we  now 
have  a  law  allowing  any  person  who  has  ten  or  more 
silver  dollars  to  deposit  them  with  the  Treasurer  or  any 
Assistant  1  reasurer  of  the  United  States  and  receive 
silver  certificates  therefor;  and  the  only  reason  so  much 
silver  is  now  on  deposit  is  because  the  people  prefer  the 
certificates.  Every  silver  dollar  now  on  deposit  in  the 
United  States  Treasury  is  discharging  the  money  function 
by  its  paper  representative.  Silver  certificates  could  be 
advantageously  used  in  the  United  States  for  every  dollar 
of  silver  in  existence  in  the  world. 

All  the  coined  silver  in  the  world  could  be  put  into  a 


APPENDIX  231 

single  room  sixty-six  feet  square  and  sixty-six  feet  high. 
It  would  not  take  a  very  large  vault  to  hold  all  of  it;  and 
all  this  talk  about  impoverishing  the  Government  to  build 
vaults  to  hold  our  silver  is  the  veriest  nonsense. 

Sec.  403.  But  what  is  the  probability  of  our  getting 
all  the  silver  in  the  world  or  any  considerable  portion  of  it? 

About  one-half  of  the  silver  in  the  world  is  in  India  and 
China.  India  and  China  are  silver-using  countries.  They 
do  not  use  gold  as  money.  China  and  India  now  are,  and 
for  many  years  have  been,  heavy  consumers  of  silver.  In 
order  to  obtain  the  amount  of  silver  required  by  them  they 
have  established  a  ratio  of  15  to  1.  Every  ounce  of  silver 
they  have  cost  them  ^1.37.  This  certainly  is  not  cheap 
silver.  Not  a  dollar's  worth  of  this  silver  could  be  brought 
to  the  United  States  without  a  loss  of  at  least  seven  per 
cent,  to  the  shipper,  besides  the  cost  of  transportation. 
No  one  supposes,  and  even  the  gold  standard  men  do  not 
claim,  that  any  silver  would  come  to  this  country  from 
Asia. 

Sec.  404.  The  total  amount  of  silver  in  Europe  is 
;^1,484,000;000,  all  of  which  is  coined  into  money,  none 
of  it  at  a  higher  ratio  than  15>^  to  1,  and  most  of  it  at  a 
much  lower  ratio.  None  of  the  European  silver  is  cheap 
silver,  and  none  of  it  could  be  shipped  to  this  country 
without  a  loss  of  at  least  three  per  cent,  to  the  shipper 
besides  cost  of  transportation.  None  of  it  can  be  spared 
from  the  circulating  medium  of  the  several  nations  where 
it  is  now  being  used  as  money. 

Not  only  can  none  of  the  stock  now  on  hand  be  spared, 
but  the  demand  in  Europe  is  for  more  silver.  In  1893 
the  amount  of  silver  coined  in  Europe  was  over  $34,000,- 
000.  And  the  amount  coined  for  the  years  1891-2-3 
averaged  over  $32,000,000  annually.  (See  Report  of 
Director  of  the  Mint  for  1894.)  Europe  has  no  silver  to 
spare.  The  United  States,  under  free  and  unlimited 
coinage,  instead  of  importing  silver,  would  continue  in 
the  future  as  she  has  been  in  the  past,  a  large  exporter 
of  silver  bullion. 

Sec.  405.  It  is  insisted  by  the  gold  standnrd  advo- 
cates that  the  free  coinage  of  silver  would  drive  gold  out 


232  BIMETALLISM 

of  the  country.  Of  course  no  person  can  know  that  such 
would  be  the  result,  he  can  only  guess  that  such  a  thing 
might  happen.  These  same  men  told  us  that  the  com- 
pulsory coinage  of  silver  under  the  Bland  Act  would  drive 
all  the  gold  out  of  the  country,  but  it  did  not  do  so.  The 
report  of  the  Director  of  the  Mint  shows  that  in  1878, 
when  the  Bland  Act  became  a  law,  there  was  but 
$213,000,000  in  gold  in  the  United  States,  and  that  from 
that  time  until  1893  there  was  coined  in  the  United 
States  from  $2,000,000  to  $4,000,000  of  silver  every 
month,  and  that  in  1893  we  had  $646,000,000  in  gold  in 
the  United  States.  Instead  of  driving  out  the  gold  there 
was  a  constant  stream  of  gold  flowing  into  the  country. 
They  were  certainly  false  prophets  in  1878,  and  we 
have  no  evidence  that  they  have  received  any  special 
inspiration  since  that  time.  There  is  not  a  particle  of 
danger  of  silver  driving  gold  out  of  the  country.  Foreign 
demand  for  gold  may  cause  its  exportation,  but  silver 
will  not  drive  it  out  of  the  country. 

Sec.  406.  The  report  of  the  Director  of  the  Mint  for 
the  year  ending  June  30,  1894,  on  page  57,  shows  that 
the  world's  production  of  silver  for  the  years  1891,  1892, 
and  1893  amounted  to  $583,464,000,  rated  at  the  ratio  of 
16  to  1.  The  same  report  shows  (page  54)  that  the 
annual  consumption  of  silver  for  use  in  the  arts  is 
$27,554,280.  This  will  give  a  total  consumption  in  the 
arts  for  three  years  of  $82,662,840.  On  page  270  the 
same  report  shows  that  the  silver  coinage  of  the  world 
for  the  same  time  was  $430,169,558.  If  these  figures 
are  correct  —  and  without  doubt  they  are  substantially 
true  —  there  was  a  surplus  left  over  each  year,  on  an 
average,  of  $23,547,200  worth  of  silver  bullion. 

Sec.  407.  The  loss  of  silver  from  abrasion  and  from 
other  causes  is  enormous.  The  Director  of  the  Mint 
published  a  tabulated  statement  in  1893,  from  which  it 
appears  that  the  world's  production  of  silver  from  1492  to 
1893,  a  period  of  four  hundred  years,  was  $9,726,072,000, 
and  that  the  total  amount  of  silver  money  in  actual 
existence  in  1893  was  $4,042,700,000,  less  than  one-half 
the  amount  produced. 


APPENDIX  233 

With  such  a  ratio  of  loss,  1  think  any  fair-minded  man 
will  concede  that  the  ;^23,547,200  yearly  surplus  will  not 
be  more  than  sufficient  to  make  up  the  loss  from  abrasion 
and  accident  to  the  stock  of  coin  now  in  existence. 

Sec.  408.  Is  there  enough  gold  to  furnish  the  people 
with  the  necessary  circulating  medium?  Turning  again 
to  the  Report  of  the  Director  of  the  Mint  for  1894,  we 
fmd  (on  page  57)  that  the  world's  production  of  gold  for 
the  years  1891-2-3  amounted  to  ^432,470,000,  or  an 
average  annual  production  of  $144,118,666.  On  page  53 
of  the  same  report  it  is  shown  that  the  annual  consump 
tion  of  gold  in  the  arts  is  $50,177,300.  This  leaves  for 
coinage  purposes  $93,941,366. 

If  gold  is  to  be  the  money  of  the  world,  we  shall  fmd, 
by  dividing  the  amount  of  gold  available  for  coinage 
purposes  by  the  population  of  the  world,  that  it  would 
give  us  an  annual  increase  in  the  circulating  medium  of 
six  cents  per  capita,  providing  none  of  the  stock  on  hand 
was  lost  or  destroyed. 

But  the  advocates  of  the  gold  standard  insist  that  it  is 
not  fair  to  divide  the  available  supply  by  the  total  popu- 
lation of  the  world,  because  they  say  a  large  proportion 
of  the  people  of  the  world  do  not  use  gold  as  money. 
Very  well,  suppose  only  one-fourth  of  the  people  use  gold 
as  money;  then  the  annual  per  capita  increase  in  circula- 
lation,  provided  none  of  the  stock  on  hand  be  lost  or 
destroyed  in  any  manner,  would  be  twenty-four  cents. 
But  would  there  not  be  some  loss  from  abrasion  and 
accidents?  The  Director  of  the  Mint,  in  tables  heretofore 
referred  to,  published  in  1893,  shows  that  the  world's 
production  of  gold  since  1492  amounts  to  $8,204,303,000, 
and  that  the  total  supply  of  gold  money  in  existence  Aug. 
16,  1893,  was  $3,582,605,000.  This  shows  a  tremendous 
loss  of  gold,  particularly  when  we  take  into  consideration 
the  fact  that  more  than  two-thirds  of  the  eight  billion 
dollars'  worth  of  gold  was  produced  within  the  last 
hundred  years.  There  can  be  no  question  but  that  with 
a  single  gold  standard  there  must  be  a  constantly 
diminishing  volume  of  money. 


^4  BIMETALLISM 

Sec.  409.  None  of  the  nations  of  Europe  are  benefited 
by  the  demonetization  of  silver  except  England,  and  all 
of  them,  with  the  exception  of  England,  would  follow  the 
United  States  in  its  remonetization. 

England  is  the  great  creditor  nation  of  the  world; 
her  imports  are  largely  in  excess  of  her  exports;  she  is 
therefore  interested  in  having  dear  money  and  cheap 
commodities.  If  commodities  are  cheap  and  money  dear 
but  little  money  will  be  required  to  settle  her  balances  of 
trade;  and  if  money  is  dear,  that  is,  if  its  purchasing 
power  is  great,  the  amount  received  as  fixed  charges  on 
the  interest-bearing  obligations  she  holds  against  other 
nations  and  the  people  of  other  nationalities  will  be  much 
more  valuable,  and  will  go  farther  in  paying  for  such 
commodities  as  she  must  obtain  from  abroad  than  it 
would  with  a  large  volume  of  money  in  circulation. 

Again,  England,  or  English  capitalists,  who  control  the 
financial  policy  of  England,  are  making  large  sums  of 
money  annually  in  buying  silver  bullion  at  much  less  than 
its  coinage  value  from  the  American  producer  and 
exchanging  it  in  India  and  other  silver-using  countries  at 
its  full  coinage  value  for  wheat,  cotton,  and  other  com- 
modities for  import  into  England.  England  will  not  agree 
to  international  bimetallism.  It  is  not  necessary  to  have 
her  co-operation  in  order  to  maintain  bimetallism. 

Sec.  410.  Bimetallism  has  existed  since  the  first 
dawn  of  civilization;  England,  however,  as  long  ago  as 
in  the  first  half  of  the  eighteenth  century  favored  mono- 
metallism. Desiring  dear  money  and  cheap  commodities, 
she  exerted  all  the  influence  she  possesses  in  favor  of  the 
discontinuance  of  the  use  of  one  of  the  metals;  and 
believing  that  silver  would  be  the  most  abundant  and 
that  it  was  a  plebeian  money,  the  money  of  the  common 
people,  she  sought  to  discredit  it.  Dutot  in  1739, 
Dessortous  in  1790,  and  Lord  Liverpool  in  1808,  as  the 
champions  of  the  aristocracy  and  money  lords  of  England, 
urged  upon  Parliament  the  propriety  of  monometallism. 
Finally,  in  1816,  silver  was  demonetized.  Notwithstand- 
ing the  fact,  however,  of  the  demonetization  of  silver  by 
England,  bimetallism  was  still  maintained,  all  the  mints 


APPENDIX  235 

of  the  world,  except  those  of  England,  were  still  open  to 
the  free  and  unlimited  coinage  of  silver,  and  silver  did 
not  depreciate  a  single  point  in  value  as  compared  with 
gold.  England  could  accomplish  nothing  alone.  Although 
she  did  all  that  she  could  do  to  discredit  silver,  silver 
remained  on  a  parity  with  gold  always  at  a  ratio  below 
16  to  1,  even  in  the  London  market,  at  all  times  between 
1816  and  1873.  It  was  not  until  after  the  demonetization 
of  silver  by  the  United  States,  the  greatest  silver- 
producing  country  in  the  world,  that  silver  began  to 
decline  value  as  measured  by  gold. 

Sec.  411.  A  peculiar  combination  of  circumstances 
favored  England  in  her  war  against  silver  in  1872-3. 
Germany,  elated  by  her  victory  over  France,  adopted  the 
single  gold  standard  under  the  impression  that  the 
;^1, 000,000,000  gold  indemnity  extorted  from  France 
would  place  her  upon  a  solid  financial  basis  and  make  her 
a  creditor  nation.  She  obtained  her  gold  standard,  but 
instead  of  becoming  a  creditor  nation  she  has  so  im- 
poverished and  degraded  the  great  mass  of  her  people  as 
to  imperil  the  very  existence  of  the  empire.  Germany 
sees  her  mistake  and  would  today  be  glad  of  any  reason- 
able pretext  to  return  to  bimetallism. 

Sec.  412.  France  has  not  demonetized  silver,  but  only 
temporarily  closed  her  mints  to  free  coinage.  The  action 
of  Germany  and  France,  two  great  commercial  nations, 
induced  several  of  the  smaller  nations  of  Europe  to  dis- 
continue the  further  coinage  of  silver,  not  because  they 
did  not  like  silver  money,  but  to  prevent  Germany,  who 
had  a  large  stock  of  silver,  from  exchanging,  after  having 
demonetized  it,  her  silver  for  their  stock  of  gold. 

In  the  United  States  in  1873  our  currency  was  paper 
money.  Gold  and  silver  were  not  used  as  a  medium  of 
exchange.  In  1873  an  act  was  passed  by  Congress  enti- 
tled "An  Act  revising  and  amending  the  laws  relative  to 
the  Mint,  assay  offices  and  coinage  of  the  United  States." 

Sec.  413.  It  is  charged  that  this  act,  which  struck  the 
silver  dollar  from  the  list  of  coins,  was  corruptly  passed 
through  both  Houses  of  Congress.  Whether  British  gold 
was  used  to  corrupt  certain  members  of  Congress,  is  not, 


236  BIMETALLISM 

and  probably  never  will  be  positively  known.  But  cer- 
tain it  is  that  not  to  exceed  half  a  dozen  members  of 
Congress  knew  at  the  time  that  the  silver  dollar  had  been 
dropped  from  the  list  of  coins,  and  they  said  nothing  about 
it  in  public.  Certain  it  is  that  President  Grant  when  he 
signed  the  act  did  not  know  that  the  dollar  was  omitted. 
Certain  it  is  that  the  press  of  the  country,  which  was 
represented  in  both  Houses  of  Congress  by  their  special 
reporters,  knew  nothing  about  it.  Certain  it  is  that  the 
people  had  never  petitioned  Congress  for  any  such 
legislation,  and  did  not  know  that  there  had  been  any 
such  until  nearly  two  years  after  the  passage  of  the  act. 

The  act  demonetizing  silver  in  the  United  States  was 
the  most  important  and  far-reaching  in  its  consequences 
of  any  act  ever  passed  by  Congress,  and  yet  no  paper 
published  anywhere  in  the  United  States  at  or  near  the 
time  of  its  passage  contains  any  reference  to  it  whatever. 

Had  the  United  States  at  that  time  been  using  gold  and 
silver  as  a  medium  of  exchange,  it  would  not  have  been 
possible  to  pass  such  an  act  without  close  scrutiny  by  the 
members  of  Congress  and  by  the  press  of  the  country; 
but  no  metallic  money  was  in  circulation,  and  an  act  to 
revise  the  laws  of  the  Mint  was  at  that  time  not  con- 
sidered of  much  importance;  and  with  the  assurance  of 
the  chairman  of  the  committee  having  the  bill  in  charge 
that  the  act  under  consideration  was  simply  an  act 
revising  the  laws  relative  to  the  Mint  and  assay  offices, 
etc.,  it  passed  without  careful  inspection.  Such  a  com- 
bination of  circumstances  is  not  likely  to  occur  in  the 
United  States  again,  and  certainly  no  act  to  revise  the 
Mint  laws  of  the  United  States  will  ever  again  pass 
Congress  without  careful  scrutiny. 

Sec.  414.  It  is  claimed  that  free  coinage  of  silver 
would  stimulate  production  to  such  an  extent  that  we 
should  soon  have  too  much  money,  that  everybody  would 
rush  to  the  mines,  and  that  in  a  short  time  we  should  be 
flooded  with  money.  It  is  quite  probable  that  with 
the  price  of  commodities  as  they  now  are  —  wheat  fifty 
cents  per  bushel,  cotton  five  cents  per  pound,  and  other 
things   in   proportion  —  many   people   would   desert    the 


APPENDIX  237 

farm  and  ranch  for  the  mine,  for  the  reason  that  they 
could  realize  more  from  their  labor  as  miners  than  they 
could  from  raising  commodities. 

But  it  should  be  borne  in  mind  that  the  value  of  money 
is  regulated  by  the  amount  of  money  in  circulation,  and 
that  as  the  volume  of  money  was  increased,  its  purchas- 
ing power  would  be  correspondingly  decreased;  that  as 
the  purchasing  power  of  money  was  reduced,  commodi- 
ties would  increase  in  valne,  and  a  point  would  soon  be 
reached  where  the  individual  could  realize  more  from  his 
labor  in  producing  commodities  than  he  could  by  mining 
silver.  As  soon  as  that  point  was  reached .  the  great 
mass  of  miners  would  desert  the  mine  for  the  farm,  and 
the  further  increase  of  money  would  cease. 

If  coinage  were  free  and  unlimited,  and  extended  to 
both  metals,  the  system  would  become  self-regulating. 
When  the  interest  of  the  people  demanded  more  money, 
more  bullion  would  be  produced;  when  the  demand  for 
noney  was  satisfied,  the  energies  of  the  people  would  be 
employed  in  producing  commodities.  The  only  thing 
that  could  possibly  interfere  with  this  automatic  regula- 
tion would  be  the  exhaustion  of  the  gold  and  silver  mines, 
or  the  discovery  of  immense  deposits  of  the  so-called 
precious  metals  in  excess  of  the  demand  for  money  — 
neither  of  which  events  is  likely  to  occur.  But  should 
either  of  these  things  happen,  it  would  only  be  necessary 
to  limit  the  coinage,  or  use  some  other  commodity  as  the 
bearer  of  the  money  stamp,  as  the  representative  of  the 
money  function.  It  is  not  necessary,  however,  to  cross 
this  bridge  until  we  get  to  it. 

If  there  is  a  large  volume  of  money  in  circulation  it  will 
find  its  way  into  the  hands  of  the  people  and  it  cannot  be 
so  easily  cornered  by  trusts,  syndicates,  and  combines; 
but  if  the  volume  of  money  is  small,  in  proportion  to  the 
demand,  it  can  be  cornered  by  the  money  king.  If  the 
volume  of  money  is  small,  its  purchasing  power  is  great 
and  commodities  cheap,  and  the  creditor  class,  the  men 
with  fixed  incomes  and  large  capital,  can  manipulate  the 
money  and  control  the  destinies  of  the  people. 


238  BIMETALLISM 

Sec.  415.  There  are  thousands  of  men  in  moderate 
circumstances,  men  who  today  are  producing  commodities 
which  they  must  sell  on  the  market  for  less  than  the  cost 
of  production,  men  whose  every  interest  would  be  pro- 
moted by  bimetallism,  that  are  shouting  themselves 
hoarse  for  a  single  gold  standard,  simply  because  such  a 
standard  is  demanded  by  their  party  leaders.  These  men 
are  honest  and  unselfish,  but  they  are  blinded  by  partisan 
prejudice.  But  how  about  the  honesty  of  the  leaders,  the 
men  who  are  informed,  who  know  the  consequences  that 
must  result  from  the  destruction  of  one-half  of  the  money 
in  existence?  These  men  are  not  honest;  but  instigated 
by  selfishness  or  by  hope  of  party  supremacy,  in  utter 
disregard  of  the  misery,  poverty,  and  absolute  serfdom  and 
slavery  that  must  be  entailed  on  the  great  mass  of  the 
people,  they  have  entered  into  the  most  gigantic  and 
fiendish  conspiracy  ever  conceived  by  man  to  enrich 
themselves  and  enslave  the  world. 

While  the  money-using  people  have  more  than  doubled 
within  the  last  half-century,  and  the  demand  for  money 
has  been  more  than  quadrupled  by  reason  of  the  immense 
advance  in  productive  industry,  these  men  propose  to 
destroy  one-half  of  the  money  in  existence  and  prevent 
the  people  from  making  any  more. 

Sec.  416.  If  a  single  gold  standard  is  adopted,  the 
annual  production  of  gold  will  not  be  sufficient  to  supply 
the  demand  for  use  in  the  arts  and  keep  the  old  stock 
good.  If  the  single  gold  standard  can  be  forced  upon 
South  America  and  Asia,  gold  must  inevitably  appreciate 
to  at  least  four  times  its  present  value,  commodities  must 
decline  to  one-fourth  of  the  present  price,  and  not  a  dollar 
for  all  time  to  come  can  be  added  to  the  circulating 
medium,  but  on  the  contrary  there  must  be  a  constantly 
diminishing  volume  of  money. 

This  is  the  contest.  If  the  money  kings  can  force  gold 
monometallism  upon  the  world  they  will  succeed  in  estab- 
lishing the  most  gigantic  moneyed  aristocracy  among  the 
rich,  and  the  worst  system  of  peonage,  serfdom  and  sla- 
very among  the  masses  that  has  ever  cursed  the  human 
race. 


APPENDIX  11. 


PRICES— HOW  CONTROLLED. 

Sec.  417.  Sauerbeck's  Index  Numbers,  universally 
recognized  sa  substantially  correct,  show  that  taking  the 
general  average  of  prices  for  1867-77  as  a  basis  of  calcula- 
tion and  the  numeral  100  as  representing  the  average 
prices  of  1867-77  that  the  general  trend  of  prices  since 
1873  has  been  downward.  In  1880  there  was  a  slight 
rally  in  prices,  and  also  in  1888,  but  in  both  instances 
they  soon  fell  to  a  lower  level  than  before.  The  general 
trend  has  been  downward  and  in  1896  prices  had  fallen  to 
61  as  compared  with  the  index  number  of  100  —  a  loss  of 
39  points. — In  1897  another  rally  in  prices  set  in  and  up 
to  and  including  September,  1899  (the  latest  accessible 
report)  had  rearched  a  level  of  70,  thus  regaining  9  of  the 
39  points  lost  since  1867-77.  (For  explanation  of  Sauer- 
beck's Numbers  see  Sections  193  to  198  this  volume.) 

Sec.  418.  A  rise  in  the  general  level  of  prices  may  be 
caused  either  by  an  increase  in  the  volume  of  money  as 
compared  with  the  commodities  to  be  exchanged  for 
money,  in  which  case  all  things  will  rise  in  price,  or  it 
may  be  caused  by  war,  short  crops,  legislation,  specula- 
tion, trust  combinations,  and  other  causes,  in  which  case 
the  price  of  some  things  will  rise  while  others  remain 
stationary  or  may  even  decline.  But  the  rise  in  price  in 
the  commodities  coming  under  the  special  influence  of 
such  subsidiary  causes  may  be  so  great  that  when  dis- 
tributed over  the  whole  list  of  commodities  considered,  as 
is  done  in  Index  Numbers,  will  show  a  general  rise,  fiaactolt  U^ 

Sec.  419.  Del  Mar  in  his  **  Science  of  Money,*' 
second  edition,  page  197,  in  showing  the  causes  that  may 
produce  a  rise  in  the  level  of  prices,  says: 


240  BIMETALLISM 

**  Besides  those  changes  in  the  general  level  of  prices  which  arise 
from  changes  in  the  whole  sum  of  money,  there  is  a  subsidiary  and 
partial  movement  of  prices  — a  change  in  the  price  of  certain  things, 
not  of  all  things— which  arises  from  war,  legislation,  speculation, 
foreign  commerce,  fashion,  the  chances  of  mining  discovery,  good 
and  bad  harvests,  the  progress  of  mechanical  invention, '  overpro- 
duction '  and  other  causes. 

"  These  influences  directly  affect  value,  whilst  money  only  affects 
price;  these  influences  whether  separately  or  combined,  may  only 
affect  the  value  of  some  things,  they  cannot  affect  that  of  all; 
whilst  money  cannot  affect  any  without  affecting  every  one.  With 
the  fluctuations  of  value  occasioned  by  the  various  causes  set  forth, 
the  Science  of  Money  has  no  concern;  they  belong  to  the  counting- 
house." 

Sec.  420.  A  rise  in  the  general  level  of  prices  result- 
ing from  a  gradual  and  constant  increase  in  the  volume  of 
money  relatively  to  the  demand  for  money  is  always 
beneficial.  As  Professor  MacCulloch  has  said:  *'It 
loosens  the  country  as  nothing  else  could  from  the  old 
bonds  of  debt  and  habit.  It  throws  increased  rewards 
before  all  who  are  making  and  acquiring  wealth  some- 
what at  the  expense  of  those  who  are  enjoying  acquired 
wealth.  It  excites  the  active  and  and  skillful  of  the  com- 
munity to  new  exertions,  and  is  to  some  extent,  like  a 
discharge  from  his  debts  is  to  the  bankrupt  long  struggling 
against  his  burdens."  On  the  other  hand  a  rise  in  the 
general  level  of  prices  produced  by  causes  other  than  an 
increase  in  the  volume  of  money,  although  it  may  for  the 
time  being  stimulate  business,  especially  in  the  produc- 
tion of  the  commodities  that  have  risen  in  price,  and  may, 
in  certain  cases,  cause  a  rise  in  the  wage  of  the  men 
employed  in  those  special  industries,  it  must  in  the  end 
be  detrimental  to  the  great  mass  of  the  people.  It 
enriches  the  few  at  the  expense  of  the  many.  As  a  rule 
the  things  that  the  wealth  producers  are  obliged  to 
purchase  have  risen  in  value  while  the  things  they  have 
to  sell  have  remained  stationary  or  have  fallen  in  value. 

Sec.  421.  An  examination  of  the  price  list  will  show 
that  not  all  prices  have  risen,  but  the  prices  of  some 
things  only,  and  that  the  commodities  that  have  risen  in 
price  almost  without  exception  are  those  that  are  con- 
trolled by  trusts  or  those  for  which  an  unusual  demand 
has  been  created  by  war,  short  crops  or  legislation;    and 


APPENDIX  II.  241 

that  things  not  so  controlled,  or  influenced,  have  remained 
stationary  or  have  fallen  in  value.  There  is  no  economic 
reason  why  wire  nails,  window-glass,  printing  paper, 
and  hundreds  of  other  articles  controlled  by  trusts,  should 
have  risen  in  price  100  per  cent.,  and  some  of  them  even 
200  per  cent.,  and  why  farming  land  and  the  products  of 
the  farm  have  remained  stationary  or  have  fallen  in  price. 
The  present  rise  in  price  has  no  economic  significance, 
and,  instead  of  being  a  blessing,  will  tend  to  widen  the 
gulf  between  the  moneyed  aristocracy  and  the  wealth- 
producers.  I  quote  from  the  Los  Angeles  Daily  Herald 
of  December  11,  1899,  the  following: 

"  If  you  do  not  think  the  trusts  are  getting  in  their  work,  just 
read  this  statement  of  E.  H.  Crosby,  a  leading  merchant  of  Topeka, 
Kansas: 

"  '  In  August  I  bought '  Blackstone,'  a  brand  of  muslin,  for  4^  cents  a  yard.  In 
September  I  paid  5%  cents  for  the  same  goods.  Lonsdale  cambric  bought  in  August 
for  514  cents  and  in  September  for  1%  cents.  Woolens  have  advanced  fully  10  per 
cent.,  and  lace  curtains  25  per  cent,  while  table  cloths  and  linoleums  have  advanced 
15  per  cent.  Furniture  is  going  clear  out  of  sight,  and  this  applies  specially  to  iron 
beds.  All  kinds  of  carpets,  except  Brussels,  have  gone  up  in  price.  It  is  all  foolish- 
ness to  pretend  that  this  increase  in  price  is  due  to  an  increased  demand.  The 
combinations  among  the  manufacturers  are  the  potent  factors.'  " 

Sec.  422.  That  the  rise  in  the  general  level  of  prices 
that  has  taken  place  since  1896  has  not  been  occasioned 
by  an  increase  in  the  volume  of  money  becomes  apparent 
from  an  examination  of  official  statistics. 

The  money  in  the  world  on  the  first  of  January,  1896, 
is  reported  by  the  Director  of  the  Mint  in  his  annual, 
1896,  report,  page  46,  at  ^4,143,700,000  in  gold,  $4,236,- 
900,000  in  silver,  and  $2,558,000,000  in  uncovered  paper 
money.  This  gives  us  a  total  at  that  date  of  $10,938,- 
600,000,  of  which  $8,380,600,000  was  metallic  money. 

The  report  of  the  Director  of  the  Mint  for  1898,  page 
48,  claims  that  on  the  first  of  January,  1898,  the  world's 
volume  of  money  consisted  of  $4,594,900,000  in  gold, 
$3,977,500,000  in  silver,  and  $2,322,800,000  in  uncovered 
paper  money.  This  shows  a  total  on  January  1,  1898, 
of  $10,895,200,000,  of  which  $8,572,400,000  was  metallic 
money.  This  estimate  of  the  Treasury  Department 
shows  a  gain  of  $191,800,000  in  metallic  money,  and  a 
loss  of  $235,200,000  in  uncovered  paper  money,  or  a  net 
loss  in  two  years  of  $43,400,000. 

16 


242  BIMETALLISM 

Sec.  423.  The  gold  and  silver  bullion  that  has  been 
or  that  will  be  produced  in  1898  and  1899,  of  course  is 
not  known,  but  the  most  extravagant  estimates  do  not 
place  it  above  ^500,000,000  worth  annually  or  ^1,000,- 
000,000  for  the  two  years.  The  amount  of  this  bullion 
that  has  been  coined  or  that  will  be  coined  into  money 
probably  will  be  about  the  same  per  cent,  of  the  pro- 
duction that  was  coined  in  the  years  1896  and  1897.  The 
production  in  1896  and  1897  was  #894,360,300  (see  report 
of  Director  of  the  Mint,  1898,  page  59).  It  appears  from 
the  statistics  already  quoted  that  after  supplying  the 
demand  for  the  arts  and  manufactures  and  making  good 
the  loss  from  abrasion  and  casualty  to  the  coins  in  stock, 
that  there  was  but  #191,800,000  worth  left  to  add  to  the 
stock  of  money,  or  21  per  cent,  of  the  total  production. 
Assuming  that  the  production  of  1898  and  1899  will 
amount  to  #1,000,000,000  and  that  21  per  cent,  of  it  will 
be  added  to  the  volume  of  money,  such  addition  would 
increase  the  metallic  money  to  #8,782,400,000  by  the  first 
of  January,  1900.  Assuming  also  that  no  further  con- 
traction will  be  made  in  the  paper  money,  the  world's 
stock  of  money  January  1,  1900,  will  amount  to  $11,105,- 
200,000,  an  increase  of  $166,600,000  in  four  years,  or  an 
average  annual  increase  of  $41,650,000.  Such  an  increase 
in  the  volume  of  money  instead  of  promoting  a  rise  in  the 
general  level  of  prices  would  not  begin  to  keep  pace  with 
the  increasing  demand  for  money.  The  development  of 
trade  and  expansion  of  business  require,  in  order  to  main- 
tain prices,  not  $40,000,000  annual  addition  but  $400,- 
000,000  annual  addition  to  the  world's  volume  of  money. 

Sec.  424.  If  not  an  ounce  of  the  gold  and  silver  now 
being  produced  from  the  mines  and  placers  of  the  world 
was  consumed  in  the  arts  and  manufactures  and  all  of  it 
should  be  coined  into  money,  it  would  be  hardly  sufficient 
to  keep  pace  with  the  increasing  demand  for  money  and 
maintain  prices  at  the  present  level.  The  money  kings 
do  not  propose  to  permit  an  increase  in  the  volume  of 
money.  They  do  not  want  rising  prices  but  falling  ones. 
They  are  not  content  with  the  consumption  of  75  or  80 
per  cent,  of  the  precious  metals  for  other  than  monetary 


APPENDIX  II.  243 

purposes.  They  demand  that  silver,  now  constituting 
about  one-half  of  the  metallic  money  of  the  world  shall  no 
longer  be  admitted  to  the  mints  of  the  world  on  terms  of 
equality  with  gold  and  that  all  silver  coin  now  in  use 
shall. be  regarded  as  token  money  only  and  that  it  shall 
be  redeemed  in  gold.  But  even  this  is  not  all.  They 
demand  that  the  $2,332,800,000  of  uncovered  paper 
money  now  outstanding,  amounting  to  more  than  one- 
fifth  of  the  world's  volume  of  money,  shall  be  called  in 
and  cancelled,  and  that  the  prerogative  of  issuing  and 
controlling  paper  money   shall  be  surrendered  to  them. 

Sec.  425.  We  have  already  seen  (see  Chapter  Xlll.) 
that  the  establishment  of  the  gold  standard  in  England 
resulted  in  doubling  the  value  of  the  bonds,  mortgages 
and  other  evidences  of  indebtedness  held  by  the  wealthy 
classes,  in  robbing  the  debtor  and  wealth  producing 
classes,  in  contracting  the  wealth  of  the  kingdom  in  the 
hands  of  a  small  per  cent  of  the  people,  and  in  the  bank- 
ruptcy and  ruin  of  130,000  out  of  160,000  of  the  small 
land-owners  in  England.  Notwithstanding  these  well 
known  facts  we  have  in  the  United  States  a  large  num- 
ber of  would-be  English-imitators  who  are  now  attempt- 
ing to  fasten  a  similar  financial  policy  on  this  country. 
This  class  is  composed  largely  of  wealthy  and  influential 
men.  They  own  the  trusts  and  combines,  they  control 
the  banking  interests,  they  dictate  the  policy  of  most  of 
the  great  newspapers  of  the  country,  they  are  attempting 
to  influence  the  pulpit,  and  they  are  making  a  desperate 
effort  to  control  the  republican  party,  and  do,  in  fact, 
control  most  of  its  great  leaders.  Many  of  the  rank  and 
file,  however,  of  that  party  have  not  yet  surrendered 
their  manhood  at  the  dictation  of  the  money  power. 
Hundereds  of  thousands  of  silver  republicans  deserted  the 
party  in  1896,  and  it  is  to  be  hoped  that  hundreds  of 
thousands  will,  now  that  the  policy  of  the  party  is  made 
clearly  manifest,  desert  it  in  1900. 

Sec.  426.  I  quote  an  editorial  of  the  Emporia  Daily 
Republican  of  May  23,  1899,  that  proves  that  not  all  the 
men  who  voted  the  ticket  in  1896  can  be  counted  for  the  gold 
standard  in  1900.     The  editorial  is  in  the  following  words: 


244  BIMETALLISM 

'*  THE  GOLD  STANDARD— Trusts  are  the  legitimate  offspring  of 
the  gold  standard.  If  you  would  get  rid  of  the  effect  you  must 
remove  the  cause.  Trusts  have  been  formed,  are  being  formed  and 
will  be  formed.  Nothing  will  stop  them  but  a  change  in  the  finan- 
cial policy  of  the  country.  All  the  small  industries  of  the  land  are 
being  closed  out.  Competition  is  being  destroyed,  men  are  being 
thrown  out  of  employment  in  the  shop,  factory  and  on  the  road. 
The  country  is  rapidly  becoming  impoverished,  wealth  is  concen- 
trating in  the  hands  of  the  few,  interior  cities  are  struck  with  the 
dry-rot  and  there  is  no  hope  for  the  people  under  a  gold  standard 
money  policy.  It  is  the  parent  of  trusts.  It  is  a  money  policy 
whi(^  paralyzes  industry  and  drives  the  larger  fish  to  eat  up  the 
smaller  ones.  The  gold  standard  is  commercial  cannibalism.  It  is 
serfdom  for  the  masses.  It  is  a  head  wind  against  all  transporta- 
tion lines.  It  is  the  undermining  rat  of  our  republican  institutions. 
Don't  stop  to  argue  the  question  with  jugglers  of  figures,  but  vote 
to  down  it  in  the  party  if  you  can,  out  of  it  if  you  must.  Country 
first,  party  next.  As  we  said  in  yesterday's  Daily  Republican, 
referring  to  the  wealth  of  the  Rockefellers,  Vanderbilts,  Goulds, 
Astors  and  others,  "if  there  is  anything  that  shows  the  incapacity 
of  the  people  for  self-government  it  is  a  system  of  legislation  under 
which  the  accumulation  of  such  vast  sums,  by  individuals,  is 
possible."  Interior  banks,  under  the  national  banking  system,  have 
felt  and  will  feel  more  perceptibly  than  ever  before,  the  gradual 
squeeze  of  the  gold  standard,  the  concentrating  power  of  which 
tends  to  centralize  all  business,  all  industries  and  all  commerce  in 
three  or  four  cities  located  on  the  larger  bodies  of  water — one  on  the 
Atlantic,  one  on  the  Pacific,  one  on  the  lakes  and  one  on  the 
Gulf — to  the  utter  destruction  of  life  and  prosperity  in  the  interior. 
These  larger  cities  will  in  turn  waste  away  because  they  will 
eventually  have  no  country  to  back  them.  The  gold  standard  is 
the  road  to  ruin.  Expansion  or  anti-expansion,  is  an  incidental 
question.  Every  patriotic  citizen,  who  loves  his  country  more  than 
his  party,  should  vote  in  the  interest  of  humanity,  to  save  the 
United  States  from  the  disastrous  consequences  of  the  gold  standard 
money  policy,  which  is  now  sought  to  be  permanently  fastened  upon 
this  country  for  the  purpose  of  bringing  our  people  under  European 
conditions.'' 

Sec.  427.  While  it  is  true  that  the  adoption  of  the 
gold  standard  in  England  made  scores  of  millionaires  in 
Great  Britain  and  would  make  hundreds  perhaps 
thousands  of  millionaires  in  this  country  it  is  also  true 
that  it  made  hundreds  of  thousands  of  paupers  there  and 
would  make  millions  of  them  here.  That  a  gold  standard 
has  never  been  a  good  thing  for  the  people,  or  satisfactory 
to  the  people  even  in  England  is  an  admitted  fact.  It  is 
simply  a  system  by  which  the  rich  can  rob  the  poor 
under  protection  of  the  law.     Sir  Guilford  Molesworth,  a 


APPENDIX  II.  245 

distinguished  English  economist,  in  an  address  delivered 
before  the  1892  International  Monetary  Conference, 
pointed  out  the  defects  in  the  system;  a  part  of  this 
address  is  quoted  in  Sec.  148,  this  volume,  which  see. 

Sec.  428.  A  gold  standard  in  the  United  States 
would  be  infinitely  worse  and  more  unsatisfactory  than  it 
is  for  England.  Some  of  the  reasons  why  it  is  not  at  all 
suited  to  the  conditions  of  things  existing  in  the  United 
States  are  given  by  Del  Mar  in  his  recent  publication 
entitled  **  Barbara  Villiers  or  a  History  of  Monetary 
Crimes,"  page  47,  from  which  I  quote  the  following: 

''  Our  foreign  commerce  does  not  consist,  as 
does  that  of  England,  in  the  profitable  func- 
tion of  buying,  selling  and  carrying  for  the 
rest  of  the  world;  but  chiefly  in  buying,  for 
our  own  consumption,  classes  of  merchandise 
which  could  probably  be  better  produced  at 
home,  and  in  selling  our  grain,  cotton  and 
tobacco  crops  at  half  price.  England  has  320 
millions  of  vassals  laboring  for  her  in  India 
and  Burmah,  she  has  40  millions  elsewhere, 
she  has  many  millions  of  negroes  in  Africa 
who  are  virtually  slaves,  she  has  15  million 
tons  of  merchant  shipping,  a  navy  equal  to 
that  of  any  three  other  powers,  and  coaling 
ports  in  every  sea  and  clime.  Unless  we  pro- 
pose to  reduce  our  own  working  class  to  the 
wages  and  condition  of  the  Indian  ryot,  the 
African  slave,  or  the  British  pauper,  we 
cannot  compete  with  an  industry  that  is  built 
upon  such  a  stupendous  mass  of  iniquity,  or 
which  has  attained  such  gigantic  dimensions. 
And  if  both  economical  considerations  and 
merciful  feelings  warn  us  to  avoid  a  field  in 
which  there  is  neither  honor  nor  profit  for  us, 


246  BIMETALLISM 

we  should  be  prepared  to  renounce  the  British 
monetary  system  which  is  fitted  alone  for 
that  field.  Its  basis  is  robbery  of  the  weak 
and  barter  with  the  strong;  its  means  are  a 
monetary  system,  entirely  subjected  to  the 
bankers  and  foreign  m^erchants  of  London; 
its  aim  is  the  elevation  of  this  sordid  and 
cynical  class  to  the  ownership  and  govern- 
m^ent  of  the  earth.  We  Am^ericans  want  no 
m^ore  of  it!  We  dem^and  that  the  Govern- 
m^ent  shall  resume  the  control  of  m.oney. 
We  demand  that  silver  shall  be  coined  on 
precisely  the  sam^e  term^s  as  gold,  whatever 
those  m^ay  be,  and  that  both  metals  shall  be 
subject  to  Governmental  seigniorage;  we 
demand  that  the  ratio  of  value  in  the  coins 
of  these  m^etals  shall  be  as  it  was  before  and 
is  yet — 1 6  for  i  of  weight;  we  want  no 
international  treaties  nor  entanglements  on 
the  subject  of  money.  In  short,  we  demand 
that  the  monetary  crimes  of  1866,  1868,  i8jo 
and  i8jj  shall  be  undone  and  the  authors 
of  the  latter  proclaimed  and  exposed  to  the 
execrations  of  an  outraged  people!" 


THE  END 


INDEX 


INDBX 


'The  References  are  to  Sections,  not  to  Pages 


Abrasion,  9,  407 

Act  of  1873,  235,  238,  253 

Ad  valorem,  121 

Advantages  of  Bimetallism,  144 

to  163,  414,  415  . 
Advantages    of   Silver    money, 

324  325 
Africa,  4,  12,  325,  395,  398 
Agio  at  thie  Banl<  of  France,  166 

167,  168,  170 
Agramonte,  Gen.  C.  H.  M.  351 
Agriculture  in  Mexico,  323,  338, 

345,  347,  349,  351,  353 
Agriculture  in  the  United  States, 

328 
Alberquerque,  Duke  of,  15 
Aldenham,  Lord,  224, 288 
Alexander,  26 
Alison,  Sir  Archibald,  181 
Allison,  Senator  W.  B.  138,  248 
Alva,  Duke  of,  15 
America,  4, 12, 14, 28,  64,  66, 147, 

392,  394,  395 
Americas,  4 
American  Colonies,  4 
American  goods,  332 
Andrews,  President  E.  B.,  61 
Andrews  Economic  Club,  315 
Annoy,  Madam  d',  15 
Arena,  75,  366 
Argentine  Republic,  325 
Aristotle,  372 
Asia,  8,  64,  66,  69,  71,  205,  208, 

281,  286,  325,  395,  416 


Asia,  a    sink   for  the  precious 

metals,  69,  70,  71 
Associated  Press  dispatch,  356 
Atkinson,  33,99,  112,  217,  234 
Austin,  L.  F.  J.,  350 
Australia,  5,  12,  16,  22,  64,  178, 

234 
Australasia,  286,  395,  397 
Austria,  164,  178,  230,  234,  283 


Bagehot,  Walter,  100, 146 

Bain,  F.  W.,  88 

Balbi,  3 

Balfour,  A.  J.,  133 

Bank  of  England,  4,  147,  148, 

149 
Bank  of  France,  122,  147,  148, 

149,  166,  167 
Banking  in  Mexico,  337,  338 
Bankers  in  Mexico,  337, 338, 342 
Barbara  Villiers,  or  a  History  of 

Monetary  Crimes,  428 
Barbon,  376 

Barbour,  Sir  David,  82, 133 
Baring  failure,  148 
Beck,  Senator,  251 
Behm  &  Wagner,  3 
Belgian  Monetary  Commission, 

123 
Belgium,  178,  329 
Bell  &  Sons,  2 
Bill  of  Rights,  4 
Bimetallic  law,  35b,   101,    116, 

117,  119 


INDEX 


249 


The  References  are  to  Sections,  not  to  Pages 


Bimetallic  law  of  France,  43,  52, 

120,  174 
Bimetallism,  44,  75,  104  to  143, 

172,  174,  318,  366,  410 
Bimetallism  in  France,  52,  118, 

148,  164  to  178 
Bimetallism,  Advantages  of,  144 

to  163 
Bimetallism  in  the  United  States, 

261  to  304 
Birch,  J.  W.,  133 
Birkmyre,  12 
Biscaina,  4 

Blaine,  James  G.,  139,  245,  249 
Blake,  12 

Bland,  Richard  P.,  246,  287 
Bland- Allison  Act,  103,  236,  237, 

293,  383,  384,  385 
Boissevain,  G.  M.,  107  to  112 
Bonebrake,  Geo.  H.,  298,  299 
Brahe,  Tycho,  Preface 
Brazil,  4,  5,  35a,  232 
Brazil,  paper  money  in,  35a 
Bricklayers  in  Mexico,  329 
British  Guiana,  397 
British  India,  397 
Brogniart,  12 
Brussels,  101 
Bryan,  W.  J.,  141 
Bullion  in  stock,  212  to  224 
Bullion  value,  210,  211 
Burchard,  H.  C.,  24 
Bureau  of  Statistics,  330 
Business  failures  in  Mexico,  323, 

343,  346,  351 


Cseser,  26,  37,  38 

Cairnes,  Prof.  J.  E.,  100,  162, 

310 
California,  5,  16,  21,  22, 178,  234  ! 
Cape  Colony,  286  ! 

Garden,  L.  E.  G.,  338,  330,  340,  \ 

341 
Carolinas,  55  i 

Case  against  bimetallism,  176 
Carthage,  13  | 


Central  American  States,  393 
Cernuschi,  Henri,  151 
Chaplin,  Henry,  133 
Chapters  on  Silver,  220 
Chevalier,  Michel,  100, 101, 126, 

127,  128,  178,  234 
Chicago  Post,  213 
Chile,  Republic  of,  325,  357,  359 
China,  4,  70,  357,  392,  403 
Christian  era,  31 
Coffee  Planters,  350 
Coinage,  Act  of  1834,  55, 57 
Coinage,  Free,  37, 121 
Coinage  in  Spain,  14 
Coinage  in  Europe  and  America  9 
Coinage  ratio  in  1717,  47 
Coinage  ratio,  how  controlled,  93 
Coins,  choice  of,  119 
Colloquy  on  Curreny,  46,  91,  98, 

159,  160,  166,  169,  170 
Commercial  Dictionary,  35 
Committee    on    Coinage     and 

Finance,  53 
Comptroller  of  the  Currency  281, 

note 
Condillac,  370 
Congressional  Record,  245,  246, 

248,  251 
Conkling,  Roscoe,  140,  244 
Considerations  of  the  Currency, 

55 
Constantinople,  Fall  of,  37,  39 
Consumption  in  the  arts,  9,  58 

to  74,  394,  422,  423 
Continuation  of  the  History  of 

Europe,  181 
Contraction  of  money,  effects  of, 

2,  181,  182,  183,  255,  256 
Copernicus,  Preface 
Corea,  357 
Cortez,  13,  26 

Cost  of  gold  in  California,  21,  22 
Cost  of  the  precious  metals,  16 

to  26 
Cost  of  production,  19,  20,  21, 

88,  89 
Cotton  and  woollen  industries  in 

Mexico,  327 


250 


INDEX 


The  References  are  to  Sections,  not  to  Pages 


Courtney,  Leonard  H.,  133, 134, 

179 
Cowdry,  Mr.  240 
Creditor  classes,  128 
Crises,  Theory  of  Jevons,  158 
Crittenden  Thos.  T.,  330,  331, 

332 
Crop  of  Gold,  162 
Crosby,  E.  H.,  421 
Cyclopedia,  International,  377 


Danson,  10,  12 

Del  Mar,  Alex.,  Preface,  2,  4,  5, 
12,  15,  16,  21,  24,  28,  29,  32, 
33,  37,  66,  67,  72,  74,  84,  87, 
92,  269,  281,  note,  419,  428 

Demand  alone  will  not  restore 
the  ratio,  293 

Demonetization  of  gold  attempt- 
ed, 178 

Demonetization  of  Silver,  233  to 

260,  412,  413 
Demonetization,  effect  of,  227 
Demonetization  of  silver  in  Eng- 
land, 179  to  184 

De  Quincey,  234 

Depreciated  money  a  bounty  for 

exports,  309,  313, 314,  347,  353 
Depreciatien  in  prices,  227 
Depreciation  of  silver,  185  to  200, 

325,  327,  338 
Dessortous,  410 
Diaz,  Porfirio,  324,  343 
Director  of  the  Mint,  71,  72,  205, 

281  and  note,  286,  391,  394, 

400 
Director  of  the  Mint,  reports  of, 

226,  281  and  note,  422 
Divergence  between  the  metals, 

261,  262 

Dominion  of  Canada,  397 
Donble  Standard,  36,  124,  125 
Doubleday's  Financial   History 

of  England,  183 
Due  de  baint  Simon,  15 
Dumas,  Senator,  258 


Dumping  ground  for  silver,  382 
Dun,  R.  G.,  «&  Co.,  346 
Duport,  12 

Dutch  East  Indies,  230 
Dutot,  410 


East  Indies,  46 

Economic  force,  44,  100,  301 

Edict  of  Nantes,  4 

Egypt,  286 

El  Mundo,  324,  325 

Emporia  Daily  Republican,  426 

Encyclopedia  Britannica,  30, 179, 

232,  389,  390 
England,  4,  46,  47, 164, 165, 184, 

328,  329,  342,  409,  411 
English  interest  in  bimetallism 

in  the  United  States,  317 
English  monetary  system,  148, 

428 
Estimates  of  the  Treasury  De- 
partment, 281,  note 
Europe,  4,  12,  28,  36,  46,  64,  66, 
103,  111,  205,  207,  227,  328, 

329,  342,  391,  392,  395,  404 
European  coinage,  226 
European  Economist,  The,  325 
Evansville,  Indiana,  342 
Exception  clause  in  the  Bland- 
Allison  Act,  237 

Exportation  of  the  precious  met- 
als, 45  to  57,  305,  306,  307,  311, 
312,  405 
Exportation  to  Asia,  69,  70 
Exports  of  the  United  States, 
309  to  313 


Facts  and  Figures  about  Mexico, 

327 
Falling  prices,  effect  of,  4,  181, 

182,  183,  184 
Farm  labor  in  the  United  States, 

328 
Farrar,  Lord,  100, 133 


INDEX 


251 


•The  References  are  to  Sections,  not  to  Pages 


Fiji  Shimpo,  357 

Finance  Report  of  the    United 

States,  71 
Financial  History  of   England, 

183 
Fisher,  Professor  Willard,  176 
Flanders,  164 
Flapdoodle,  114 
Fluctuations  from    the   coinage 

Ratio,  119,  120,  174 
Fluctuations  in  prices  of  com- 
modities, 344,  350 
Foreign  capital,  355 
Fowler,  J.  M.,  348 
France,  4,  29,  37,  43,  46,  47,  52, 

110,  115,  120,    147,   148,   164, 

169,  177,  178,   230,   234,   329, 

400,  411,  412 
French  coinage  law  of  1803, 118, 

176,  177 
French  coinage  law,  changes  in, 

174 
French  monetary  system,  147, 

149 
French  ratio,  51, 165, 174 
Free  coinage,  121,  228 
Free  coinage  in  England,  37 
Free  coinage  in  Holland,  37 
Freedom  of  production,  18,  19 
Freemantle,   Sir    Charles,    133, 

213,  217 
Frewen,  Moreton,  287 
Fronde  of  France,  4 


Gallatin,  Albert,  55 

Gambling    instinct   promotes 

mining,  24,  25 
Garfield,  James  A.,  140,  244,  247 
Garnett,  Lewis  A.,  20,  25 
Genoa,  164 
Geneva,  164 

General  Statutes,  235,  238 
Georgia,  55 
German  States,  178 
Germany,  4,  47,  132,  177,  230, 

234,  283,  328,  329,  385 


Gesell,  Silvio,  325 

Gibbs,  Henry  Hucks,  46, 91,  98, 

159,  166,  169,  170,  287 
Gibson,  G.  H.,213 
Gide,  Professor  Charles,  82,  83, 

222,  371 
Giffen,  Sir  Robert,  33,  60,  67, 

72,  74,  99,  100,  112,  169,  175, 

234 
Gold   mines   and    placers,    the 

Great,  5 
Gold,  production  of,  7 
Gold  overvalued  in  1834,  55 
Gold  standard  in  Argentine  Re- 
public, 325 
Gold  Standard  in  Chile,  325, 359 
Gold  Standard  in  England,  179 

to  184,  425,  427,  428 
Gold  Standard  in   Japan,  357, 

358 
Gold  Standard  in  Mexico,  336, 

344,  345,  346,  347,  349,  351,  352 
Gold  standard  Democrats,  141 
Gold  and  silver  prices  compared, 

191 
Graham,  Sir  James,  182 
Graham's  Synonyms,  85 
Grant,  J.  W.,  343 
Grant,  President,  238,  240,  241, 

413 
Gratuitous  coinage,  122 
Greek  Democracies,  163 
Greeley,  Horace,  291 
Great  Britain,  133,  317,  397 
Groesbeck,  William  S.,  36 


n 


Habeas  Corpus  Act,  4 

Hamburg,  101 

Hamilcar,  13 

Hamilton,  Alex.,  144,  145 

Hannibal,  13 

Hat  Edict,  98 

Hay,  Sir  Hector  M.,  12,  213, 217 

Head  Professor,  73,  74 

Hegewisch,  Adolfo,  347 

Helm,  Elijah,  125 


252 


INDEX 


The  References  are  to  Sections,  not  to  Pages 


Herschell,  Lord,  133 

Herald,   Los  Angeles,  356,  420, 

426 
History  of  the  Precious  Metals, 

1,  2,  5,  13,  21,  24,  28,  66,  87, 

92,93 
History  of  the  Precious  Metals 

by  Jacob,  16 
History  of    Bimetallism   in  the 

United  States,  69,  70,  73,  74 
Hoarding  gold  and  silver,  160 
Holland,  164,  178,  230 
Holman,  246 
Honest  Dollar,  61 
Hooper,  245,  246 
Houldsworth,  Sir  W.  H.,  133 
Humboldt,  Baron  Von,  3,  7, 12, 

74 
Huskisson,  Wm.,  170 
Hydraulic  mining,  23 


Increase  of  wealth  1860  to  1880, 
309 

Inconvertible  paper  money,  34, 
35,  179, 180 

Import  duties,  339 

Index  numbers,  193,  199,  417, 
418 

India,  4,  70,  177 

India,  prosperity  of,  under  a  sil- 
ver standard,  315 

Indian  Currency  Commission, 
35a,  179,  230,  231,  232 

Indian  Currency  Committee, 
224,  288,  289 

Indian  Mint,  103,  189 

Individual  coinage,  37 

Industrial  and  Commercial  His- 
tory of  England,  81 

Inflation  from  bimetallism,  201 
to  229 

Influence  of  law  on  value,  95  to 
103,  383 

International  agreement,  290 

International  Monetary  Confer- 
ence of  1867,  256 


International  Monetary  Confer- 
ence of  1878,  36,  174,  242,  256, 
259 

International  Monetary  Confer- 
ence of  1892,  62,  78,  79,  138, 
148,  177,  254,  302,  313,  320 

International  Cyclopedia,  377 

Intrinsic  value,  75,  366,  367  to 
381 

Insurance,  176 

Investigations  in  currency  and 
finance,  151 

It  is  gold  that  is  sick,  148,  186 

Italy,  328 

Italian  republics,  4 


Jacob,  3,  4,  8,  9,  12,  16,  65,  71 

Japan,  4,  5,  70,  282,  315,  328, 
357,  358 

Japan,  prosperity  of,  under  sil- 
ver, 315 

Jefferson,  Thomas,  55,  145 

Jevons,  Prof.,  80,  100,  150  to 
158,  178,  378,  379,  385,  387, 
420 

Joint  Standard,  125,  198 

Jones,  Senator  John  P.,  72,  77, 
78,  79,  183,  234,  254,  255,  257, 
258,  260,  310,  374 

Juarez,  349 

Journal  des  Economistes,  329 

Judas,  253 

K 

Kansas  City  Star,  332 
Kelley,  Hon.  W.  D.,  244,  245 
King  William,  46 
Knox,  John  Jay,  243 


Labor  in  demand  in  Mexico,  344, 

347,  348 
Land-owners  in  England,  184 
Latin  America,  325 


INDEX 


253 


The  References  are  to  Sections,  not  to  Pages 


Latin  Union,  131,  132,  147,  177, 

230 
La  Tribuna  Valparaiso,  359 
Laughlin,  Prof.  J.  Laurence,  33, 

69,  71,  73,  74,  99, 113, 176,  234, 

386 
Laughlin's    Bimetallism   in  the 

United  States,  70 
Laughlin's    Political    Economy, 

386 
Laveieye,  Professor  M.  de,  123, 

163 
Leavitt,  Samuel,  243 
Legal  Tender,  35,  35a 
Legislative   demand,   387,    388, 

389 
Link  that  held  the  metals  to- 
gether, 271,  272,  292 
Liverpool,  Lord,  410 
Lloyd,  Henry  D.,  333 
Locke,  John,  Preface 
London,  101,  147,  171 
London  Financial  News,  317 
London  Statist,  188 
Los  Angeles  Herald,  356 
Lubbock,  Sir  John,  133 
Lucas,  James,  332 

M 

Mallett,  Sir  Louis,  133 
Manufacturing  in  Mexico,  323, 

325,  327,  342,  344,  345,  347, 

349,  351,  354 
Market  value  for  silver,  268, 269, 

270 
Marshall,  Prof.  Alfred,  187,  209, 

210,  211,  223 
Matsukata,  357 
MacCulloch,  Prof.  J.  R.,  3,  4, 

12,  35a,  420 
McCulloch,  Hugh,  401 
McKinley,  Wm.,  140,  141 
McLeod,  Prof.  H.  D.,  234,  375 
Melting-pot  fallacy,  106,  114 
Mexico  and  the  United  States, 

327,  328 

and  silver  money,  329  to  365 


Mexico,  prosperity  of,  313,  315, 

323,  324,  326,  344  to  350,  356 
Mexican  army,  324 

Central  R.  R.  Co.,  327 

debt,  324 

delegates,  313,  320 

exports,  313, 314, 320,321.  322, 

323,  338,  345,  347,  350,  353 

Herald,  324,  326,  342 

National  R.  R.  Co.,  344,  360 

Trade  Review,  320,  322,  323 

wages,  323,  328,  329,  330,  340, 

345,  347,  348,  350,  351 
Mill,  John  Stuart,  17,  35a,  80, 

89,  90,  100,  309,  preface 
Miller,  Henry  G.,  220 
Mint  charges,  121,  176 
Mirbach,  Count,  316 
Milreis,  Brazilian,  35a 
Molesworth,  Sir   Guilford,   62, 

148,  177,  186,  192,  259,  302 
Money  and  Civilization,  15,  29, 

30,  32,  41 

and  Mechanism  of  Exchange, 

150,  151,  379 

and    monetary  problems,  63, 

129,  191,  231 

demand  for,  129,  130. 

essential  elements  of,  94,  231, 

232 

held  in  reserves,  227 

in  1809,  9 

in  the  world  in  1884,  63 

in  the  world,  where  located, 

71,  205,  422,  423,  424 

question,  135,  221 

stock  of,  in  1493,  3 

stock  of,  in  1879,  3,  4 

science  of,  84 

Trade  and  Industry,  76,  86,  90 

value  of,  93,  94 
Monetary  Conference  of  1881, 

147 

Commission  of  1876,  124 
'     systems,  37,  269 

system  of  England,  148,  149 
Monometallists,  425 
Monometallism,  theory  of,  115 


254 


INDEX 


The  References  are  to  Sections,  not  to  Pages 


Montague,  Sir  Samuel,  133 
Monterey,  349 
Montesinos,  I.  Dublan,  322 
Moreton  Frewen,  287 
Morton,  Gabriel,  344,  360 
Muhleman,  Maurice  L.,  218 

N 

Napoleon,  181,  183 

Natural  ratio,  151,  154,  155,  156, 

157,  158 
Netherlands,  47,  109 
New  Orleans  Picayune,  324 
New  York,  101,  147 
Newton,  Sir  Isaac,  46,  48,  49, 

Nicholson,  Prof.  J.  Shield,  129, 

135,136,  191,  231 
Normandie,  M.  de,  147, 149 
North  American  Review,  328 


O'Brien,  Terrence,  114 
Objections  to  32  to  1  ratio,  96, 

289,  290,  291 
Occident,  37 
Omaha,  142 
Ord,  E.  G.,  349 

Orient,  67,  68,  71,  126,  212,  226 
Our  Money  Wars,  243,  252 


Pacific  Coast,  161 

Palgrave,  Mr.,  63,  64,  67,  72,  74 

Papal  States,  4 

Paper  money,  306,  307,  308, 35a, 

179 
Paper  money  in  England,  179 
Paper    money    in    the    United 

States  1861  to  1880,  309 
Paraguay,  35a 
Paris,  332 

Parity  of  exchange,  230, 231, 232 
Per  capita  circulation,  3 
Perry,  Prof.  A.  L.,  373 
Petty-Jacob,  3 


Philip  IV.,  14, 15 

Philippine  Islands,  324 

Pizarro,  13,  26 

Political  Economy,  Mill,  17, 80 

Political  Economy,  Jevons,  80 

Political  Economy,  Gide,  83 

Portugal,  389,  390,  399 

Portugal,  Moidores  of,  46 

Premium  on  coins,  116, 117, 119 

Premium  on  gold,  327 

Precious  metals,  production  of, 

6,  12,  40,  41,  42,  120,  157,  158, 

189,  386,  395,  406,  408 
Prices,  203,  204,  417,  418,  419, 

420,  421,  422,  423,  424 
Probable  fall  in    the   value    of 

gold,  126 
Production  of  gold  in  Africa,  395 

in  America,  395 

in  Asia,  395 

in  Australasia,  395 

in  Europe,  395 
Production  of  silver  in  America, 

391   392 

in  Europe,  391,  392 
Prosperity,  causes  of,  327,  343, 

344 
Protective  tariffs,  333,  334,  335 
Prussia,  29 
Purchasing  power   of  silver  in 

Mexico,   328,   339,    340,    344, 

345,  347,  348,  350 
Purdy,  Mr.,  346 


Quarterly  Journal  of  Economics, 
176 


Railroads  in   Mexico,  322,  324, 

338,  348, 
Ratio  between  the  metals,  27  to 

44,  129,  131, 156,  175 

is  arbitrary,  156,  157,  158, 264, 

265 

of  the  Moors  in  Spain,  156 


INDEX 


255 


The  References  are  to  Sections,  not  to  Pages 


Ratio  of  other  nations  in  Europe, 

156,  164 

of  Rome,  38,  156 

of  United  States,  51,  52,  53, 

54,  55 

of  32  to  1,  objections  to,  96 
Raynal,  12 
Reformation  in  Western  Europe, 

4 
Republican  Party,  138,  139,  140, 

141,  142,  143,  317,  425 

League,  142 

Convention  of  1896,  140,  142, 

143 
Restriction  Act,  179 
Reservoirs,  tlie  two,  152, 153, 387 
Resumption,  Act  of  1819, 181, 184 
Revenue  Laws,  335 
Ricardo,  David,  35a,  231 
Rising  prices,  effect  of,  4,  124, 

126,   127,  128,  131,  418,  419, 

420,  421 
Rogers,  Prof.  Thorold,  81 
Roman  Mining,  13 
Roman  or  Greek  Empire,  37 
Romero,  Don  Matias,  327,  328, 

329,  338,  342,  352,  353,  354, 355 
Rosebery,  Lord,  338 
Rothsciiiid,  Baron  de,  294,  295, 

257,  259 
Rowland,  M.,122 
Royal  Gold  and  Silver  Commis- 
sion, 129,  131,  132,  133,  187, 

209 
Rusconi,  Count,  102 
Russia,  4,  5,  147,  178,  283,  396 


San  Francisco  Chronicle,  309 

Sargent,  Mr.,  248 

Sauerbeck,  Mr.,  12, 193, 194 

Saxony, 164 

Scandinavia,  230,  385 

Schools  in  Mexico,  322,  324 

Science  of  money,  84, 281,  note, 
419 

Science  Primer  of  Political  Econ- 
omy, 158 


Scipio ,  26 

Scotland,  46 

Scramble  for  gold,  267,  281,  note 

Seigniorage,  14,  121,  174,  175, 

176, 278 
Seyd,  Ernest,  3,  259 
Sherman,  John,  243,  245 
Sherman  Act,  103,  205,  293,  383 
Shibley,  Geo.  H.,  221 
Siam,  70 

Sibley,  Joseph  C,  216 
Silver  bullion  in  stock,  210,  211, 

212,  213,  214  to  226,  275,  280 
Silver,  coinage  of,  273,  274,  275 

annual  coinage  of,  226,  274 

depreciation  of,  185  to  200,266 

money  in  the  world,  281,  286, 

290 

money,  more  required,  282 

money  in  Asia,  281 

money  in  Europe,  281,  283,  284 

money  in  the  United  States, 

281 

money  in  Mexico,  322,  323, 324, 

325,    327,   328,  336,  348,   349, 

353,  354,  355 

money,  where  located,  281 

overvalued     in     the    United 

States  in  1792,  54,  55 

too  heavy  for  money,  402 

plate,  15 

The  Future  of,  59 

Republicans,  141 

Situation,  219 

Production  of,  40,  41,  42 
Simple,  Peter,  114 
Simon,  Due  d'  Saint,  15 
Sir  Robert  Peel  Act,  181 
Smith,  Adam,  17,  Preface 
Soetbeer,  12,  58,  67,  72,  74 
Sombrereta,  4 

South  African  Republic,  286 
South  America,  26,  286,  393,  416 
South  Sea,  4 
Spain,  13,  14,  26,  41,  46,  328, 

389,  390,  399 
Spencer,  Preface 
Spindola,  Senor  R.  R.,  324 


256 


INDEX 


The  References  are  to  Sections,  not  to  Pages 


Sprague,  Prof.  A.  R.,  315 
Statistical  Journal,  3,  10 
Stokes,  Anson  Phelps,  296,  297 
Storch,  3 

Straits  Settlement,  70,  357 
Suess,  Prof.  Eduard,  59,  67,  72, 

74 
Supply  and  demand,  95,  334 


Tariff,  333,  335 

Taussig,  Prof.  F.  M.,219 

Taylor,  J.  P.,  323 

Telegraph  in  Mexico,  324 

Theory  of  Bimetallism,  116,  117 

The  European  Economist,  325 

The  Greater  Japan,  358 

The  London  Statist,  188 

The  Trader,  343 

The  Two  Republics,  345 

The  United  States  can  coin  all 

silver  offered,  280 
Thurman,  Senator,  252 
Tiji  Shimpo,  357 
Tooke,  12 
Treasury  Department  estimates, 

281,  note 
Trusts,  333,  334,  335,  418,  419, 

420 
Towne,  Hon.  Charles  A.,  222a 
Turkey,  328 


U 


U.  S.  coinage  law  of  1792,  53, 54 

U.  S.  coinage  law  of  1834,54 

U.  S.  alone  can  maintain  bimet- 
allism, 177,  287,  302,  303 

U.  S.  on  a  silver  basis,  305  to 
318 

United  States,  4,  29,  49,  51,  72, 
103,  115,  132,  136,  138,  177, 
183,  205,  206,  226,  230,  328 
335,  342,  360,  400 

United  States  Monetary  Com- 
mission, 124 

United  Kingdom,  132 


Vail,  Wm.  L.,  345 
Valenciana,  4 
Value,  75  to  86,  367  to  381 
Value  affected  by  legislation,  383, 

384,  387,  388,  389 
Value  is  not  intrinsic,  367  to  381 
Value  of  commodities,  17 
Value  of  coins,  102, 108, 113 
Value  of  the  precious  metals,  17, 

26,  87  to  94,  267,  268,  269,  277 
Venice,  164 
Voltaire,  3 
Voorhees,  Daniel,  245,  249,  250 

W 

Wage  earners  in  Mexico,  323, 
327,  328,  329,  334,  345,  349, 
350 

Wages  of  farm  labor  in  the  Uni- 
ted States,  328,  348 

Walker,  Prof.  Francis  A.,  76, 86, 
90,  100,  242,  256 

War,  418,  419,  421 

Ward,  12 

Warner,  A.  J.,  215 

War  in  Germany,  4 

Wealth  of  Nations,  17 

Wealth  vs.  Commonwealth,  333 

Weavers,  329 

Wells,  David  A.,  33,  99,  112, 
234 

West  Indies,  230 

Western  World,  9,  66,  69,  70, 
71,  72 

Wolowski,  Louis,  151 

Wood,  Col.  S.  N.,  300 

World's  demand  for  money,  276, 
423,424 

World's  coinage  for  1894-5-6-7, 
226,  274 

World's  production  of  gold  and 
silver,  6,  12,  40,  41,  42,  120, 
157,  158,  386,  395,  406,  408 


Young,  John  P.,  309 


